1. Bitcoin Mining Costs Vary Drastically Globally, Reveals CoinGecko
The diverse landscape of electricity pricing across the globe affects the profitability of Bitcoin mining for solo operators, as unveiled in a study by CoinGecko on August 17. The stark contrasts became evident when it was noted that generating a single Bitcoin in Italy would set a miner back by $208,560. Conversely, in Lebanon, a miner would spend a mere $266 for the same achievement.
The study gives a comprehensive overview of 65 nations where Bitcoin mining remains profitable based solely on domestic electricity rates. Asia dominates this list, boasting 34 countries, whereas Europe trails with a mere five.
To put things into perspective, the typical cost of mining a Bitcoin with household electricity amounts to $46,291.24. This figure stands 35% above the average Bitcoin price as of July 2023, which was $30,090.08. Italy emerges as the country where Bitcoin mining hits the pocket hardest, with each coin’s creation cost being nearly equivalent to the value of eight Bitcoins. Austria and Belgium aren’t far behind, with mining costs standing at $184,352 and $172,382, respectively.
Lebanon, in stark contrast, offers the most economical rates. Generating a Bitcoin in Lebanon is about 783 times more affordable than in Italy. Not far behind Lebanon, Iran also offers competitive rates with a Bitcoin’s production cost pegged at $532. Notably, even though Iran recognized Bitcoin mining as a legal activity in 2019, it has intermittently clamped down on operations, mainly due to electricity grid overloads during colder months. Early this year, Iran’s OCSSOP confiscated a massive haul of around 150,000 crypto mining devices.
Adding to the conversation on Aug. 19, Binance’s CEO, Changpeng Zhao, shared CoinGecko’s findings on X, emphasizing the low electricity costs in several nations. While Zhao agreed that low energy costs might present an attractive prospect for miners, he voiced concerns over the study’s depth, noting other potential variables at play. Echoing these concerns, an X user pointed out that several nations with competitive electricity rates grapple with power shortages. As a result, industries often go offline, especially during summer or high-demand periods.
2. Bitcoin Miners Pivot To Other Areas In Quest To Diversify Earnings: JP Morgan
Digital asset miners are moving to other business ventures including offering high-powered technology services to artificial intelligence (AI) companies to improve earnings.
A new report from JP Morgan shows that crypto-based mining firms are expanding their operations to include high-performance computing, reducing their dependency on core primary operations, cryptocurrency.
The bank noted that while Bitcoin (BTC) miners lead the number of cryptocurrency miners transitioning up AI, other asset miners like Ethereum (ETH) also add to the surging figures.
As a result of the Ethereum Merge which saw the network transition to a Proof-of-Stake blockchain, with users staking assets to secure the network, miners began selling their high-earned hardware in the secondary market leading to a high supply and a slight drop in prices.
It should be stated that while most miners pivoted out of the industry, others preserved their equipment to mine other Proof-of-Work (POW) assets although it was not as profitable as mining Ether.
Nikoloas Panigirtzoglou, an analyst at JP Morgan argued that AI has opened a new phase for former Ethereum miners fueled by the demand for high-performance computing.
“With the rapid growth of AI, the increased demand for high-performance computing is now opening a new and perhaps more profitable avenue for utilizing GPUs previously used for ether mining.”
Several mining firms have changed their names to reflect the growing diversification trend with Riot Blockchain changing its name to Riot Platforms and Hive Blockchain Technologies now known as Hive Digital Technologies.
A new economy for blockchain firms
A major factor for the switch in digital asset mining firms to AI is added profitability. According to the research report, several mining firms have conducted beta tests by offering HPC services to firms with a part of their equipment.
Results from these tests show that offering HPC services to AI firms appears to be more profitable than mining Bitcoin because of the high energy intensity of the latter.
“If the profitability reported in beta tests is able to be repeated on a large scale it would overshadow in the future the revenues coming from bitcoin mining at the moment,” the report reads.
The dreaded crypto winter of 2022 is another factor that sparked the need to diversify earning streams. Last year, digital assets hit lows not recorded in several years as multiple assets including BTC and ETH lost over 55% of their values.
As a result, most miners were stretched beyond their capacity in what was termed “miners in the woods” by most observers leading to the sale of their BTC reserves and turning to new sources to stay afloat.
The resurgence of the market this year gave miners a new lifeline coupled with the strong indications of potential approval of a spot BTC ETF by the Securities and Exchange Commission (SEC) which will positively affect the prices of assets.
Last month, JP Morgan wrote that the next Bitcoin halving in 2024 will be a stress test for the industry as “it would reduce the issuance rewards from 6.25 to 3.125 BTC, implying a reduction in miners’ revenue, effectively increasing Bitcoin’s production cost at the same time.”
3. Genesis Digital Assets Expands Bitcoin Mining Capacity in Sweden
Genesis Digital Assets (GDA), one of the worlds largest Bitcoin miners in terms of hash rate, has announced the inauguration of its new mining facility situated in the northern reaches of Sweden, according to a press release sent to Bitcoin Magazine. The data center’s capacity is currently 8 megawatts (MW), with plans for further expansion “in the near future,” and has been operational since June 2023.
The new facility is strategically located near the 417 MW Porjus Hydroelectric Power Station, known for its carbon-free electricity production. GDA aims to take advantage of this renewable energy source for its Bitcoin mining operations.
“With abundant energy sources, a pro-innovation environment, and a strong educational system that results in a great culture of innovation, we believe that Sweden is one of the best countries in the world where to mine bitcoin and expect to further invest in this beautiful region moving forward,” commented Tim Carra, Head of Nordic Operations at GDA.
GDA has collaborated with a local company help to oversee the day-to-day operations of the new facility. The facility, which was once a conventional data center, marks GDA’s third venture in Sweden within a three-year span, including a greenhouse data center pilot introduced in 2020.
“Our expansion of facilities in the Nordics is a testament to our unwavering commitment to utilizing green energy sources,” said Abdumalik Mirakhmedov, Executive President and Co-Founder of GDA. “We aim to lead the bitcoin mining industry by setting an example for other players by minimizing our environmental impact.”