Bitcoin miners rethink business strategies to survive long-term

Must read

The Bitcoin mining industry continues to face a challenging year as the price of Bitcoin $20,815 hovers below $20,000, coupled with rising energy costs in North America and Europe. Regulators have also recently started clamping down on crypto mining, as a recent report from the Bitcoin Mining Council (BMC) found that Bitcoin has seen a 41% increase in energy consumption year-on-year (YoY). As a result, a number of crypto mining companies have been forced to sell off equipment, while others have filed for bankruptcy.

Yet, this hasn’t been the case for some miners, particularly those focused on clean energy solutions and strategic approaches. For example, in September, crypto mining firm CleanSpark announced an agreement to acquire Mawson’s Bitcoin mining facility in Sandersville, Georgia, for $33 million. The crypto mining company White Rock Management also recently expanded its mining operations to Texas.

Bitcoin miners rethink business strategies
While miners like CleanSpark and White Rock Management continue to grow, others may need to rethink their business strategies. Elliot David, head of climate strategy and partnerships at Sustainable Bitcoin Protocol — a green Bitcoin mining certification protocol — told Cointelegraph that he believes conditions for miners are going to get worse before things improve. “Miners that want to survive the long term will have to change their strategy,” he said.

Indeed, some miners are making adjustments. For example, Jonathan Bates, CEO of crypto mining firm BitMine, recently mentioned in a press release that due to the sharp decline in mining rig prices, the firm will currently only focus on self-mining rather than hosting for others.

“Given the sharp drop in ASIC prices, we feel that focusing on self-mining is a better use of our datacenter equipment and a better use of firm capital at this time,” he stated. He added that the firm plans to “pursue joint ventures and partnerships where our infrastructure equipment can be paired with ASIC miners valued at current prices.”

The press release further noted that on Oct. 19, Bitmine entered into a repurchase and hosting agreement with The Crypto Company (TCC), a publicly listed blockchain company.

Under this agreement, Bitmine agreed to repurchase certain ASIC miners previously sold to TCC while also purchasing additional ASIC miners owned by TCC. Bitmine will also terminate the hosting agreement that it had established with TCC.

To be specific, Bitmine sold TCC 70 Antminer T-17s for $175,000, along with 25 Whatsminers for $162,500, for a total purchase of $337,500 during February this year.

Simultaneously, Bitmine and TCC entered into a hosting agreement under which Bitmine agreed to host the miners, along with other miners owned by TCC.

Due to current conditions, it’s been noted that Bitmine will accept the return of the 70 Antminer TY-17s for a credit of $175,000 as a warranty claim. Bitmine will also purchase the 25 Whatsminers for $62,500 and the 72 Antminer T-19s from TCC for $144,000. This marks a significant decrease in price from when the units were initially sold.

In 2021 — during the height of the crypto bull run — Bitmine entered into an agreement with a telecommunications company located in Trinidad and Tobago. The agreement allows Bitmine to co-locate up to 125 800-kilowatt containers for hosting miners over 93 potential locations. Bitmine is also able to co-locate containers at its own pace, paying a fixed amount per container, along with the electricity costs incurred by its containers.

At the time of the agreement, Bitmine noted that the electricity rate expected to pay for the hosting containers was $0.035 cents per kilowatt-hour. This was based on the rate currently paid by the telecommunications company.

In October of this year, Bitmine completed the installation of its initial hosting containers in Trinidad. However, prior to commencing operations, Bitmine shared that the telecommunications company advised that the electric company would not honor its existing agreement and instead indicated that the rate would be approximately $0.09 per kilowatt-hour. Although the telecommunications company has protested this decision, Bitmine has chosen to delay the installation of additional containers in Trinidad until the dispute is resolved.

The future of crypto mining
Given recent changes being made by miners, David believes that the crypto-mining industry is approaching a junction. “Miners will need to diversify their revenue streams,” he said. With this in mind, he explained that there has been growing interest from clean energy miners that want to work with Sustainable Bitcoin Protocol to ensure sustainable mining practices as a way to be more financially resilient.

Echoing this, Offord mentioned that he is seeing more interest from miners regarding their environmental impact. “Miners are seeking opportunities in places where there is flare gas that needs to be mitigated, or where biofuel is being created from farm waste. Miners are not just focused on building a Bitcoin mine, but want to build something sustainable that can be carbon negative.”

In addition to sustainability, David pointed out that regulations are becoming more important than ever before for crypto miners. He noted that this is especially true within the United States, noting:

“The industry in the U.S. is becoming increasingly aware that unless they regulate themselves that the various levels of government might step in. I’ve spoken with a number of policymakers and staffers, and in a crunch the Bitcoin mining industry will be a likely first target.”


More articles


Please enter your comment!
Please enter your name here

This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.

Latest article