Forced selling from Bitcoin miners raises concern about BTC price, but the use of renewable energy and the oil and gas industry’s growing interest in BTC are longterm positives.
A July 9 post by @PricedinBTC on the “cost to mine Bitcoin” in the United States gathered the crypto community’s attention, especially considering the recent headlines that BTC miners have made. The crypto bear market and growing energy costs have caused a perfect storm for the mining sector and this has led some companies to lay off employees and others to defer all capital expenditures. Some went as far as raising concerns of Bitcoin miners hitting a “death spiral.”
In bear markets like this, inevitably a Bitcoin critic comes out and says that Bitcoin will soon collapse from a “miner death spiral”, meaning that miners will go offline because it is not profitable to run their operations, and then Bitcoin’s hash rate will fall, causing its…
— Cory Klippsten (@coryklippsten) July 6, 2022
However, Raymond Nasser, the CEO of Arthur Mining, a professional mining company operating in the United States told Cointelegraph that their margins don’t full concur with the data from @PricedinBTC.
Cost to mine 1 #bitcoin in every U.S. state pic.twitter.com/JKug0KtGVq
— Priced in ₿itcoin ∞/21M (@PricedinBTC) July 9, 2022
Arthur Mining’s current capacity is 25 megawatts (MW) and the company focuses on environmentally friendly energy sources. At first, one could dismiss their numbers as listed companies like Marathon Digital Holdings have 300 MW plants, but these rely on the traditional grid energy — even if a portion of the power originates from hydro-electric plants.
To achieve the best environmental, social and governance (ESG) practices, the smaller scale mining operations utilize undervalued flare and stranded gas from the oil and gas industry. Their secret is mobile Bitcoin mining facilities, tapping greener, more efficient and more profitable energy sources compared to traditional solutions.
Regarding the $16,000 production cost for miners, Nasser said:
“These diagrams are extremely subjective. The biggest new projects in the industry are looking for off-grid solutions, and this diagram represents some of the most expensive on-grid energy costs used in urban areas. Our all-in energy costs are lower than $0.02 kWh in two different U.S. States.”
Electricity costs have doubled in the past year
Data from QuickElectricity shows that from March 2022 commercial electricity costs per kilowatt/hour (kWh) ranged from $0.08 to $0.09 in the U.S. state of Idaho, Utah, Virginia, Texas, Nevada, North Dakota, Nebraska and Oklahoma.
One of the strong points of the Bitcoin network is that it prioritizes efficiency, meaning, the labor intensive production process will always seek out the lowest operational costs and shift toward that. ASIC mining equipment is mobile, but more importantly, there is optionality for other energy sources. For example, these machines can be installed in containers, shipped to offshore oil and gas structures, and work with oscillating power sources.
To date, Upstream Data, a Canada-based manufacturer of Bitcoin mining data centers, builds portable Bitcoin mining equipment and infrastructure for natural gas without the need for any pipelines or midstream facilities. After deploying over 180 of these data centers, it is becoming clear that this activity is becoming mainstream.
Earlier this year, CNBC explored how renewable energy is used in the Bitcoin mining process and to date, Giga Energy Solutions, a natural gas Bitcoin mining company, have signed deals with more than 20 oil and gas companies, four of which are publicly traded.
Higher interest rates and Bitcoin’s collapse is hurting BTC miners
Regardless of the energy source, miners have been struggling with their balance sheets. Besides the impact of lower Bitcoin prices, financing has been a major hurdle across the…
Read More: cointelegraph.com