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11/20/2023
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1. How Bitcoin miners bring new energy to age-old value
The digital age is upon us, and with it comes the potential for a seismic shift in our financial systems. The rise of cryptocurrencies, spearheaded by bitcoin, is one of the starkest examples of how things are changing, with opportunities and challenges.
And perhaps at the center of it all is the bitcoin mining industry, a field that is critical to the largest cryptocurrency and one that uses cutting-edge technology to transform our use of the most important force in the universe: energy.
To gain a better understanding of how this central industry is changing everything around us, Roundtable anchor Rob Nelson hosted a discussion with its leaders. He was joined by a panel of bitcoin mining industry leaders, including Frank Holmes of HIVE Digital Technologies (HIVE), Sam Tabar of Bit Digital (BTBT) and Adam Swick of Marathon Digital Holdings (MARA).
Nelson started by highlighting the unique position of bitcoin miners. Unlike traditional gold miners who primarily focus extraction, today’s bitcoin miners possess a deep understanding of both finance and technology. This dual expertise makes them invaluable voices in the broader conversation on bitcoin’s future.
The challenge of mass adoption remains at the forefront. Nelson pondered whether the introduction of spot bitcoin exchange-traded funds (ETFs) might be the much-needed catalyst. He also queried the role of wallet technology in making bitcoin transactions as straightforward as using PayPal or making a purchase from a retailer.
2. An Interview with Bitcoin Miner: Stories Behind Mining
As traditional financial institutions such as BlackRock eagerly applied for approval to issue a spot Bitcoin ETF, Bitcoin is attracting more attention and seeing its price climb up. Recently, Bitcoin’s price hit a new high for the year, surpassing $37,000. The upcoming year 2024 is crucial for investors in the crypto industry. As the next quadrennial halving event is due in 2024, Bitcoin’s price is expected to experience dramatic fluctuations based on past occurrences.
While Bitcoin’s price continues to rise, another fact that might be neglected is that the mining hashrate across the network is also on the rise. Since January 2022, Bitcoin hashrate has surged from 200 EH/s to the recent 450 EH/s. Mining is still a little-known and low-profile investment to many. The author recently had an interview with a Bitcoin miner to take you through the story behind mining from the miner’s perspective.
Bitcoin Miners: Adventurers in the New Era
“It is a vivid name. Bitcoin miners are often associated with traditional miners who traveled to the new continent in search of gold. We are heading for a future filled with the unknown and uncertainty as well as numerous opportunities. Some quit with losses, while some make substantial gains. The early birds who take the venture tend to earn more.”
In the early days, when Bitcoin still had a low hashrate, some enthusiasts could mine Bitcoin using their personal computers. Some of them sold early, while some believers held on for the long term. The latter became the first adventurers to achieve financial freedom in the “Bitcoin rush”.
Sure enough, failure is nothing new in the industry. For instance, when the Chinese mainland banned Bitcoin mining in 2021, some miners had no choice but to sell their mining rigs at a low price and bid farewell to the industry. In the Bitcoin bear market of 2022, major publicly listed crypto miners such as Core Scientific also ended up applying for bankruptcy protection amid the crypto winter.
Mining: Fight No Battle Unprepared
According to the miner, some people may mistakenly believe that mining is an easy investment—just buy mining rigs and earn Bitcoin. However, this is not the case. Particularly with the rising hashrate, the control over every detail directly affects the final profit.
Many miners give priority to policy risks and electricity prices, which makes geographical location crucial. Currently, miners tend to establish mining farms in regions such as North America (the United States and Canada), Northern Europe (Norway and Iceland), the Middle East (UAE and Saudi Arabia), Latin America (Paraguay and Brazil), Kazakhstan, and Russia. These countries and regions offer more friendly policies. More importantly, they have abundant energy resources, which makes the electricity supply stabler and cheaper.
Another consideration is the selection of mining rigs. New mining rigs boast better performance but come at a higher cost, which means a longer payback period. Besides, they experience greater price fluctuations in the early stages. Mining rigs also vary between futures and spot markets. Therefore, selecting the right mining rig is crucial for beginners.
Way to Survive: Embrace Long-termism
Bitcoin’s hashprice is often viewed as an indicator of mining profitability. In 2021, due to the impact of the policies released by the Chinese mainland, the hashrate across the network declined. Meanwhile, with the Bitcoin price remaining high, miners counted their luck through a “hashprice super cycle”. However, as the bear market hit in 2022, Bitcoin’s hashrate kept rising, and its hashprice tightened, making survival a top priority for numerous miners.
Fortunately, miners’ efforts were not in vain. In 2023, Ordinal inscriptions emerged, leading to a surge in mining fees which even surpassed the block rewards at their peak. It is also a major contributor to the recovery of hashprice this year.
We also communicated with ViaBTC Pool mentioned by the miner. Founded 7 years ago, it is ranked among the top five Bitcoin pools in terms of hashrate.
Bitcoin mining is a game for adventurers. Some are fortunate enough to amass a wealth of coins, while others choose to give up along the way. Judging from what the miner said, we can also anticipate that more people will join this business, which involves both risk and reward and requires a longer cycle to mitigate risks.
3. Tether Maps Out 3-Year Mega Bitcoin Mining Plans
Tether Holdings Ltd, the issuer of United States Dollar-pegged stablecoin USDT has drawn out a 3-year mega plan for its Bitcoin mining venture, a move that includes investing $500 million into the sector until 2025.
Tether Bitcoin Mining to Gobble in $500M
In a recent development, Tether has made certain giant strides toward becoming one of the world’s top Bitcoin mining companies. For a highly competitive industry like BTC mining, Tether’s $500 million is a significant investment that could push the $87 billion stablecoin operator to reasonable heights within the next six months.
According to Tether’s newly appointed CEO and former CTO Paolo Ardoino, the funds will be directed towards the construction of its crypto mining sites and also in the purchase of stakes in other companies.
“We are committed to being part of the Bitcoin mining ecosystem,” Ardoino highlighted. “When it comes to the expansions, building new substations and new sites, we are taking them extremely seriously.”
The Tether Bitcoin mining adventure was underscored in September when the firm decided to acquire some stakes in crypto miner Northern Data Group. Aside from crypto mining, the strategic partnership involved the exploration of Artificial Intelligence (AI) in the mining ecosystem.
The Northern Data Group-Tether collaboration was speculated to be worth $420 million but no official announcement was made to confirm this. However, the $500 million investment for Tether Bitcoin mining is believed to be part of a $610 million credit facility that Tether extended to the Frankfurt-based Bitcoin mining company.
With its current plans, the company hopes to hit 120 megawatt in its mining operations by the end of the year and 450 megawatts by the end of 2025.
Tether Making Pivot Away from USDT
For a top stablecoin issuer, recognized for its dominance in the industry, Tether is hinting at an expansion of its operations beyond the “four walls” of the USDT token. Its involvement in direct Bitcoin mining could transform the competition around USDT. The introduction of Bitcoin mining software as well as other moves has been made in line with the company’s Bitcoin mining mission.
In May, Tether announced the launch of Tether Energy, a major investment in energy production and sustainable Bitcoin mining. The mining operations went live in Uruguay in partnership with a local licensed company.
Speaking in a statement at the time, Ardoino expressed confidence that “by harnessing the power of Bitcoin and Uruguay’s renewable energy capabilities, Tether is leading the way in sustainable and responsible Bitcoin mining.
