Bitcoin mining – a catalyst for economic growth? And more

07/13/2023 0 Comments

1. Bitcoin mining – a catalyst for economic growth?

Bitcoin presents a unique opportunity for the United Kingdom. Its potential goes beyond being a decentralised form of payment; it can drive renewable energy development, create jobs, and generate tax revenue.

By understanding the value and potential of Bitcoin, the UK government can position itself as a leader in the evolving digital payment space.

The global market for the Bitcoin mining industry alone is valued at $1.92 billion (£1.53 billion) and is predicted to rise to $7 billion (£5.56 billion) by 2032. However, the UK currently holds a meagre share of 0.23% in Bitcoin mining, lagging behind smaller nations.

It is crucial for the UK government to recognise the economic growth potential within this sector and take action to attract investment and foster job creation. By doing so, the UK can tap into this emerging market and establish itself as a significant player in Bitcoin mining.

The environmental advantage

Contrary to popular misconceptions, Bitcoin mining can be an ally to the UK’s renewable energy ambitions. The country faces the challenge of intermittent energy sources like wind and solar, which necessitates overbuilding the supply to ensure a consistent energy flow.

Bitcoin miners can play a crucial role by co-locating with renewable energy plants, monetising surplus power, and providing an ideal demand response. By maximising the utilisation of renewable energy sources, Bitcoin mining can contribute to a greener energy grid and help reduce emissions.

Regulation for success

To unlock the potential of Bitcoin mining and attract large-scale miners, the UK requires clear and effective regulation. The country’s contacts with large Bitcoin mining entities emphasise the need for regulatory clarity and highlight the interest in utilising the UK’s wasted and stranded energy.

By treating Bitcoin mining on par with data or AI computer centres, the UK can create a conducive environment for miners to thrive. A prime example of innovative mining solutions is Scilling Mining, which uses agricultural waste to power miners, directly reducing greenhouse gas emissions.

By embracing such practices, the UK can position itself as a global leader in sustainable cryptocurrency mining.

Mitigating wind energy challenges

The UK faces challenges in efficiently harnessing wind energy due to limitations in the power transmission network.

The curtailment of wind turbines on the windiest days costs the National Grid £215 million annually, ultimately burdening consumers through higher energy bills. However, strategically locating Bitcoin mining operations near wind farms can provide a solution.

By absorbing excess energy during peak production, Bitcoin mining can optimise wind energy utilisation and generate additional revenue. This symbiotic relationship between wind energy and Bitcoin mining can address grid infrastructure limitations while bolstering economic growth.

The road to a greener future

Embracing careful regulations that encompass Bitcoin mining and AI compute centres can lead the UK towards a greener future. Beyond fostering job creation and generating tax revenue, this approach can contribute to the reduction of greenhouse gas emissions.

Cutting methane (CH4) emissions, in particular, is crucial for slowing down climate change, and the UK’s significant sources of CH4 include the oil & gas industry, landfills, and agriculture. By implementing sustainable Bitcoin mining practices, the UK can make significant strides in reducing emissions from these sectors.

It is important to recognise that Bitcoin’s energy use should not be compared to that of a single country, as it is a global network.

Comparing it to the energy consumption of individual countries can be misleading. In reality, Bitcoin uses only 0.22% of global energy, highlighting its relatively low energy footprint compared to larger countries like China and the US.

Understanding this perspective is crucial to accurately assess the energy impact of Bitcoin and its potential role in a sustainable energy future.

The security level of the Bitcoin network has experienced a significant increase of over 200% (211% more mining power added) since 2017.

Remarkably, during this period, the emission intensity of the network, which measures greenhouse gas emissions per kilowatt-hour (KWH), has actually decreased by 4%.

Conclusion

By embracing Bitcoin mining, the UK can unlock opportunities for economic growth, renewable energy development, and emissions reduction.

With the right regulatory framework and strategic partnerships, the UK can position itself as a leader in sustainable cryptocurrency mining.

It is time to recognise the value and potential of Bitcoin, harness its benefits, and pave the way for a greener and more prosperous future for the United Kingdom.

2. Standard Chartered boosts 2024 bitcoin forecast to $120,000

LONDON, July 10 (Reuters) – The value of top cryptocurrency bitcoin could reach $50,000 this year and $120,000 by the end of 2024 Standard Chartered (STAN.L) said on Monday, predicting the recent jump in its price could encourage bitcoin “miners” to hoard more of the supply.

Standard Chartered published a $100,000 end-2024 forecast for bitcoin back in April on the view the so-called “crypto winter” was over, but one of the bank’s top FX analysts, Geoff Kendrick, said there was now 20% “upside” to that call.

“Increased miner profitability per BTC (bitcoin) mined means they can sell less while maintaining cash inflows, reducing net BTC supply and pushing BTC prices higher,” Kendrick said in a report.

Bitcoin’s price has leapt 80% since the start of the year but its current level of just over $30,200 is still less than half the $69,000 it peaked back in November 2021.

Trillions of dollars were wiped from the crypto sector in 2022, as central banks hiked rates and a string of crypto firms, such as the FTX exchange, imploded. This year’s collapse of a number of traditional-style banks though has fed the rebound.

Standard Chartered said the rationale for its predicted price rise was that miners who mint the 900 new bitcoins produced each day around the world would soon need to sell fewer to cover their costs – mostly electricity to power super-computers.

Kendrick estimated that miners have recently been selling 100% of their new coins. If the price hits $50,000 though, they would probably only sell 20-30%.

“It is the equivalent of miners reducing the amount of bitcoins they sell per day to just 180-270 from 900 currently.”

3. Vanguard Increases Bitcoin Mining Stake To Over $0.5 Billion

Vanguards Bitcoin Mining Investments

The company has been snapping up shares of Marathon Digital and Riot Platforms, two major players in the Bitcoin mining space. Vanguard now holds 17.5 million shares of Marathon Digital, a 60% increase from its previous position. Given Marathon’s current share price of $16.03, this puts the value of Vanguard’s investment at a cool $280.5 million.

But Vanguard didn’t stop there. It also boosted its holdings in Riot Blockchain, a Colorado-based Bitcoin miner. Vanguard now owns 17.9 million shares of Riot, an 18% increase from its previous stake. This additional investment is worth over $281 million, pushing Vanguard’s total investment in Bitcoin mining firms to a whopping $560 million.

An Institutional Change Of Heart

This is all quite surprising given Vanguard’s stance just two years ago. Back then, the company had been very sceptical about the long-term investment potential of cryptocurrencies. However, much water has since flowed under the bridge and now Vanguard has become the largest shareholder of Marathon Digital.

Not just Vanguard, but the broader financial industry, seems to be warming up to cryptocurrencies. Last week, BlackRock CEO Larry Fink described Bitcoin as an “international asset”, and “digitised gold”. BlackRock, which manages $9.5 trillion in assets, recently applied to the SEC for a Bitcoin exchange-traded fund. It’s also the second-largest investor in Marathon Digital.

Bitcoin Mining Big Business

Bitcoin mining, once a niche activity, has evolved into a big business. Today’s miners are large operations that use server farms and consume a lot of energy. In return for their efforts in verifying blockchain transactions, they’re rewarded with newly minted Bitcoins. It’s a high-stakes game, and it seems Vanguard is betting big on its players.