02/18/2024 0 Comments

1. US bitcoin mining giant ‘looking at Africa’ amid expansion efforts

North America’s largest public crypto miner has made global expansion a part of its strategy.

While Florida-based Marathon Digital has already branched out to the United Arab Emirates and Paraguay in recent months, it also has its eye on a continent seeing an influx of miners.

“We are looking at Africa,” said Charlie Schumacher, vice president of corporate communications at Marathon Digital. “We believe that bitcoin mining is, among other things, a technology solution for the energy sector, and Africa may be a great place to prove out this thesis.”

Ethiopia has seen an increased inflow of miners recently as companies in the segment search for low-cost energy and ideal climate, Bloomberg has reported. It has become home to Chinese companies, for example, who were forced out of operating in their home country following a crypto mining ban in 2021.

Certain African countries have stranded or underutilized power, Schumacher told Blockworks.

“If we can attach bitcoin miners to these power sources, then we can increase the profitability of those power sources and ensure they stay online for the people who need them,” he said.  “Across the continent, there is also a need for more power,” Schumacher added. “Bitcoin miners can incentivize the buildout of more power across the continent by serving as the first customer for new power projects.”

Marathon Digital, which has US operations in Texas, Nebraska and North Dakota, increased its hash rate in January to 26.4 exahashes per second (EH/s), a 7% month-over-month increase.

Last year, the company expanded into the United Arab Emirates through a joint venture with FS Innovation. It more recently, in November, partnered with Penguin Infrastructure Holding to establish a new operation near Paraguay’s Itaipu Dam.

Marathon executives have said geographic diversity is one way the company can reduce costs ahead of the bitcoin halving slated in April — an event during which per-block rewards for miners are slashed in half.

As Marathon keeps watch on developments in Africa, one of its biggest competitors remains focused on building out its already sizable footprint in the US.

A spokesperson for Core Scientific told Blockworks that the company looks to execute its “pragmatic, multi-year growth plan” for an additional 372 megawatts of infrastructure at its data centers in Texas. Core Scientific, which emerged out of bankruptcy last month, had an energized self-mining hash rate of 18.6 EH/s at the end of January.

“We continuously evaluate growth opportunities, both within and outside of the United States, and believe that a consistent and supportive regulatory framework is essential to the long-term success of bitcoin mining and the security of the bitcoin network,” the representative added.

2. Bitcoin Mining and the Politicization of a Once Reputable Federal Agency

The Energy Information Administration’s (EIA) mandatory emergency survey of electricity consumption data represents the latest in a politically motivated campaign against bitcoin mining, cryptocurrency, and U.S.-led innovation. We believe this should cause concern for all industries that rely on data centers as part of their operations.

Lee Bratcher is a board member and president at the Texas Blockchain Council. Perianne Boring is founder and CEO of the Chamber of Digital Commerce.

Instead of focusing on improving our aging electricity infrastructure and working to ensure grid stability, the Department of Energy and EIA have prioritized taking unprecedented steps to target private businesses for political purposes. This action is an abuse of authority in order to further the Biden administration’s public goal “to limit or eliminate” U.S. bitcoin miners, while pleading ignorance to U.S. miner’s utilization of renewable resources and uniquely flexible operations.

The survey asks for information that goes beyond the typical requests made by the EIA. For decades the EIA has conducted itself as an apolitical information gathering body within the Department of Energy (DOE). Had this survey been in-line with previous surveys, there would be no cause for alarm.

However, this survey is specifically targeting bitcoin miners and asking for private information such as the name of the energy company with which the miner has signed power purchase agreements. It is not a logical leap to be concerned about the Biden administration putting pressure on those energy providers to discontinue their business with bitcoin miners.

Thanks to bitcoin miners’ ability to rapidly adjust their data centers’ power usage according to grid conditions, their operations are the most flexible and responsive electrical loads in the nation. It is well known that they offer critical grid stabilizing benefits to the communities in which they operate.

These capabilities were on full display during recent periods of cold weather in Texas, which the EIA boldly cites in its justification for this misguided measure. If the stated justification for this emergency action – concern with data centers potentially overloading the grid – is to be trusted, other industries, such as financial institutions and social media companies, should now also be on notice of this troubling new tactic.

In ERCOT, which operates Texas’s electrical grid, and many other independent system operators (ISOs) across the country, prices are the best proxy for grid stress. There are other proxies such as physical responsive capability (PRC), but prices are a better measure for most situations. For that reason, in order to prevent swings in prices and create more challenging grid conditions, an optimal environment is one in which the price does not swing wildly up and down. But that is traditionally what happens (see the graph below from last year’s Winter Storm Elliot).

Bitcoin miners are the economically perfect consumers of electricity. That is not to say that bitcoin miners will consume electricity in an altruistic way, but rather that bitcoin miners are so sensitive to the price of power that they are economically incentivized to curtail their consumption when power prices rise past their breakeven (current breakeven for most miners ranges between $100 and $200 per megawatts/hour, with some exceptions for miners with hosting contracts that have uptime requirements).

3. Bitcoin mining difficulty breaks above 80 trillion for first time

The Bitcoin BTC mining difficulty, the measure of how hard it is to solve the mathematical problem associated with a block, passed 80 trillion on Friday.

The hash rate for the network, which meters the total computational power dedicated by miners, rose to 562.81 EH/s with the mining difficulty reaching 81.73 trillion — a new all-time high, according to the blockchain explorer BTC.com. With its consistent increase since January 2023, bitcoin mining difficulty is on a course to reach 100 trillion in the coming months.

With Bitcoin’s proof-of-work consensus mechanism, mining difficulty gauges the complexity of adding a new block to the blockchain. The higher the difficulty, the more computational power and energy a miner needs to find the right hash for the new block. For the Bitcoin network, the difficulty level has more than doubled in the past 12 months.

Bitcoin’s price hit $51,783.74 at 10:45 a.m. ET on Feb. 16. The last time bitcoin’s price was that high was in November 2021, according to The Block’s Price Page.

Bitcoin halving

Bitcoin’s mining rewards will be cut in half in late April in what’s known as the ‘Bitcoin Halving.’ Bitcoin’s programmers baked the reduction into the token’s structure roughly every four years to fight inflation. The last time bitcoin’s mining reward halved was in May 2020.

Come the next halving, bitcoin’s rewards will fall to 3.125 BTC from 6.25 BTC. The halving may cause a reduction in hash rate as inefficient miners struggle to break even from their mining rewards and exit. A lower hash rate is expected to lead to a decreased bitcoin mining difficulty as the network attempts to maintain consistent block production every 10 minutes.