Bitcoin Miners Joyride on the Bitcoin Price, and Fight for Fair Regulation
Updated: Mar 27
Bitcoin mining has been growing at a rapid pace in the past couple of years in North America and as the industry evolves, there is a need for fair regulations to ensure the growth and success of the business. Educating the public and regulators on Bitcoin mining's energy consumption and emissions, and its benefits for electricity grids and development of renewable projects is crucial. In this article, I cover the most recent movements in the regulatory space as well as Bitcoin network stats concerning Bitcoin miners.
Hashprice: Bitcoin Miner's Ultimate Roller Coaster
Network hashrate and difficulty have been on the rise this year and once again we saw new all-time highs in Bitcoin network. Bitcoin network hashrate reached 330 EH/s and difficulty of 43T in the first week of March.
Hashprice is highly impacted by Bitcoin price and these past few weeks have been the ultimate roller coaster for Bitcoin miners.
Hashprice maintained an average above $70 PH/Day hash for the first two weeks of February and reached a maximum of $80 PH/Day after a short rally in Bitcoin price.
Then the Silicon Valley Bank collapsed, and Bitcoin price plunged below 20K, this caused the Hashprice to decline to low $60 PH/Day.
But Bitcoin price made a quick recovery and Hashprice is now back above $80 PH/Day.
Despite record high network hashrate and difficulty and highly volatile Hashprice that negatively impact mining economics, Ordinals seem to be adding a new dimension to Bitcoin miners’ revenue. According to Luxor, in February Bitcoin miners earned $1.35M in transaction fees for inscribing 200,000 ordinals. To this date, more than 500,000 ordinals have been inscribed on the Bitcoin Blockchain.
Bitcoin Mining Myths v.s. Facts
Bitcoin Mining Council published its Q4 survey results earlier this year. For those of you who don’t know bitcoin mining council, BMC is a voluntary forum of Bitcoin mining companies and other companies in the bitcoin mining industry. BMC was founded in May 2021 with support from MicroStrategy and its chairman Michael Saylor. Bitcoin Mining Council goal is to promote transparency and educate the public on the benefits of Bitcoin and Bitcoin mining. BMC members operate 119 EH which is 48% of global hashrate.
BMC members have been improving their operations in terms of sustainable energy usage, hardware efficiency, and contribution to the grid.
According to the survey, respondents were able to increase their hashrate by 45% YoY, while increasing their energy consumption by only 25%. This translates to a 16% efficiency improvement, largely due to the installation of new generation miners with higher efficiency.
Bitcoin miners use the most sustainable power mix among all other industries globally. Based on the result of this survey, BMC members and global Bitcoin mining industry utilize 63% and 59% sustainable power mix respectively. Unlike any other industries, Bitcoin mining is location agnostic, and this enables mining companies to tap into remote and under-utilized electricity sources. Since most of these energy sources are renewables like wind and solar, Bitcoin miners can reduce their electricity cost, increase their sustainable power mix, and support the development of such projects.
Due to its flexible load, Bitcoin mining acts as battery storage for the grid during peak demand events. This is a unique feature of Bitcoin mining. The operation can be turned off in the matter of minutes and be turned back on as soon as the peak demand event ends. This shows the importance of Bitcoin mining in stabilizing the electricity grids as we see on BMC report, 14 BMC members reported 2.1 GW contribution to curtailment programs in Canada and the United States. This is a 25% addition to existing utility battery storage without any additional investment as building these battery storages is very expensive.
Regulations: A Blessing or a Curse
Educating the public and regulators on the benefits of Bitcoin mining is crucial in making sure that right policies are implemented to protect the future growth of the business as this industry evolves. Recently there has been some activities in this area:
Texas Blockchain Council at the NAPE Expo 2023
Texas Blockchain Council partnered with NAPE to launch the new Bitcoin Mining Pavilion at the 2023 NAPE Summit in Februaey. NAPE Summit is one of the largest Oil & Gas events across the globe. It brings together domestic and international decision-makers in the energy industry to network and make deals.
The Bitcoin Mining Pavilion included education sessions, exhibitors and company presentations showcasing technology and opportunities for investment in the Bitcoin mining space.
This is a great initiative in introducing mutual benefits of Oil & Gas industry and Bitcoin mining.
A Day At The Parliament Hill
Canadian Blockchain Consortium along with Hut8, Hive Blockchain, Iris Energy, Luxor, and Binance Canada held an education day at the parliament hill in Ottawa. Benefits of digital asset mining for job creation, economy, environment, and electricity grids were discussed in this event.
Late last year, Canadian provinces like Quebec, British Columbia, and Manitoba paused development of new mining operations on hydroelectric grids. Educating regulators through these initiatives can help Canada to reach its fullest potential to becoming a hub for Bitcoin mining. As Canada has abundant and under-utilized hydro, natural gas, and renewable energy resources across its provinces.
Montana; A Bitcoin State
Montana state passed a bill to protect individuals and businesses to mine crypto. The bill prohibits local government to impose higher electricity rates to miners.
This is an important step in protecting the future of mining and growth of the business specially after some jurisdictions in the United States have put a pause on mining operations and imposed higher electricity rates on crypto miners.