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Bitcoin miners rethink business strategies to survive long-term

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The Bitcoin mining industry continues to face a difficult year, with the price of Bitcoin falling (Bitcoin) below $20,000, coupled with rising energy costs in North America and Europe. Regulators recently started cracking down on cryptocurrency mining, according to a recent report from the Bitcoin Mining Council (BMC). Bitcoin rises 41% Year-over-year (YoY) of energy consumption. As a result, many cryptocurrency mining companies were forced to sell their equipment. Others have filed for bankruptcy.

But that’s not the case for some miners, especially those focused on clean energy solutions and strategic approaches.For example, in September, cryptocurrency mining company CleanSpark Acquisition agreement announced Mawson’s Bitcoin mining facility in Sandersville, Georgia sold for $33 million.Cryptocurrency mining company White Rock Management also recently Expands mining operations to Texas.

Why Some Bitcoin Miners Are Successful in Bear Markets

CleanSpark executive chairman Matthew Schultz told Cointelegraph that he believes mining is a unique way to reduce energy costs when utilized for reasons other than making a profit. Told. According to Schultz, this perspective differentiates CleanSpark from other cryptocurrency mining companies. “Bitcoin mining is a potential solution for increasing opportunities for energy development,” he said.

Schultz elaborated that CleanSpark partners with US cities such as Georgia and Texas to purchase surplus energy. For example, he noted that CleanSpark works with communities in Georgia that receive energy from the Georgia Regional Power Authority.

“These cities essentially become our utility companies. of energy purchases reduces energy costs for the communities we work with.We aim to have a positive impact on cities by lowering energy costs.” He said.

CleanSpark CEO Zach Bradford inspects a mining pod with technicians at the company’s College Park Bitcoin Mining Campus.Source: Clean Spark

Schultz also said that CleanSpark has partnered with energy company Lancium to support its data center in West Texas. Purchase of surplus renewable energy Create grid stability. As a result, Schultz now has $500 million worth of his assets on CleanSpark’s balance sheet and less than $20 million in liabilities, backed by investors such as BlackRock and Vanguard. clarified.Given this, Schultz said that cryptocurrencies bear market The impact on CleanSpark is different compared to other cryptocurrency miners.

For example, he pointed out that a year ago when 1 Bitcoin was worth $69,000, many miners were discussing plans to hold on to BTC. “These miners have also made big promises to companies like Bitmain about future deliveries of their mining rigs,” he said. However, according to Schultz, CleanSpark did extensive analysis of the number of mining rigs ordered last year and also looked at future energy projections. he said:

“We came to the conclusion that instead of sending mining equipment deposits to providers last November and not what is currently being delivered, there could be an oversupply of rigs and increased energy costs. We sold it when the coin was in the $60,000 range and invested the proceeds in infrastructure instead.”

Not only has this allowed CleanSpark to acquire a new mining facility in Sandersville, Georgia, Schlutz also noted that the company is currently buying bitcoin mining rigs at very low rates. “A rig that was $100 per terahash a year ago he is buying for $17 per terahash.”

With many miners forced to sell their equipment, used and new mining rigs are being sold at below market prices, creating buying opportunities for companies like CleanSpark.

Scott’s Crypto Mining, owner of Scott’s Crypto Mining (a service that offers mining training courses, as well as new and used mining equipment), has been discontinued based in part on lack of demand due to Bitcoin’s low price. , told Cointelegraph that miner prices are currently very cheap. Offord added that many of the used miners they sell today are rented from hosting facilities. He said:

“During the last bull market, you couldn’t get miners without a 6-month lead time. We get rid of gear because there are new things on the market, but now people seem to be selling because they need the cash flow.”

Offford also pointed out that there are many new mining gears hitting the secondary market. “Many new-generation antminers are being resold. For example, he, who is currently some of the most efficient miners in the world, is like the S-19,” he said.

As for pricing, Offord explained that cryptocurrency miners could potentially buy the new Antminer S-19j pro for around $20 per terahash. “This same machine would cost three times as much if he had a three-month lead his time a year ago,” he added.

Andy Long, chief operating officer of Bitcoin mining company White Rock Management, told Cointelegraph that miners who sell equipment generally don’t buy hardware when prices were high. In response to Offord, he said he was doing it to cover payments on Ware’s debt. “The hardware is now being bought by well-capitalized miners and will continue to be used to secure the network,” he said.

White Rock Management Texas Mine Site.Source: White Rock Management

Long added that White Rock Management’s U.S. operations were unaffected by the bear market, and that its Texas facility is operating completely off-grid. “While White Rock’s U.S. operations are powered by Flare natural gas, his mining operations in Sweden are also 100% hydroelectric.”

Bitcoin miners rethink business strategy

Miners like CleanSpark and White Rock Management continue to grow, while others may need to rethink their business strategies. Elliott David, head of climate strategy and partnerships at the Sustainable Bitcoin Protocol, told Cointelegraph that miners are getting worse before things get better. said he was thinking “Miners who want to survive in the long term will have to change their strategies,” he said.

In fact, some miners are making adjustments. For example, Jonathan Bates, CEO of cryptocurrency mining company BitMine, recently mentioned According to a press release, mining rig prices have plummeted, so the company now plans to focus solely on self-mining rather than hosting for others.

“Given the plummeting prices of ASICs, we feel that a focus on self-mining makes better use of data center equipment at this time and makes better use of corporate capital,” he said. I was. He added that the company plans to “pursue joint ventures and partnerships that could combine his ASIC miner with infrastructure equipment valued at current prices.”

The press release further noted that on October 19, Bitmine signed a buyback and hosting agreement with listed blockchain company The Crypto Company (TCC).

Under this agreement, Bitmine has agreed to purchase additional ASIC miners owned by TCC, as well as buy back certain ASIC miners previously sold to TCC. Bitmine will also terminate the hosting agreement established with TCC.

Specifically, Bitmine sold a TCC 70 Antminer T-17 for $175,000 and 25 Whatsminers for $162,500 for a total purchase of $337,500 in February this year.

At the same time, Bitmine and TCC entered into a hosting agreement, with Bitmine agreeing to host the miner along with other miners owned by TCC.

Due to the current situation, it is noted that Bitmine will accept the return of 70 Antminer TY-17s as a warranty claim with a credit of $175,000. Bitmine will also purchase 25 Whatsminers for $62,500 and 72 Antminer T-19s from TCC for $144,000. This marks a significant drop in price since the unit was first sold.

In 2021, at the height of the cryptocurrency bull market, Bitmine signed a deal with a telecommunications company in Trinidad and Tobago. The deal will allow Bitmine to co-locate up to 125 800-kilowatt containers to host miners in 93 potential locations. Bitmine can also co-locate containers at its own pace, paying a fixed amount for each container plus electricity for the container.

At the time of the deal, Bitmine said the electricity bill it expected to pay for the hosting container was 0.035 cents per kilowatt hour. This is based on the rates currently being paid by carriers.

In October of this year, Bitmine completed the installation of its first hosting container in Trinidad. However, Bitmine shared that before it went into operation, it informed the telecom company that it would not honor existing contracts, instead indicating that the rate would be around $0.09 per kilowatt-hour. Telecom companies protested the decision, but Bitmine chose to delay the installation of additional containers in Trinidad until the dispute was resolved.

The future of cryptomining

Given the recent changes made by miners, David believes the crypto mining industry is nearing a tipping point. “Miners need to diversify their revenue streams,” he said. With this in mind, he hopes to work with the sustainable Bitcoin protocol to ensure sustainable mining practices as a more economically resilient method of clean energy and growing interest from his miners. I explained that there is

In response, Offford said miners are showing more concern about their environmental impact. “Miners are looking for opportunities where there is flare gas that needs to be mitigated or where biofuel is being made from farm waste. Instead, we want to build something carbon negative and sustainable.”

In addition to sustainability, David noted that regulation is more important than ever for crypto miners. He points out that this is especially true within the United States, stating:

“U.S. industry is becoming increasingly aware that governments at various levels may intervene unless they regulate themselves. Bitcoin mining could be first in crisis.