Riot mined 28% less Bitcoin in July
In July, Riot mined 28% less BTC than normal in order to help Texas meet its energy needs.
Riot is one of the largest Bitcoin miners in the world, and one of the few mining companies that is publicly listed on the stock exchange.
As the Bitcoin hash rate continues to rise, the price of Bitcoin remains low, the mining industry has been suffering. Unlike 2021, when almost all Bitcoin miners were extremely profitable, since the cost of mining a BTC was so low compared to the price, in 2022 the mining industry is far more difficult.
These issues are compounded when one considers that both Marathon and Riot have issued debt in the past in order to avoid having to sell their Bitcoin and their mining equipment.
One of the largest hubs for Riot’s mining activities is in Texas, which experienced such a strong heatwave throughout July that the state grid operator asked [people to focus on conserving energy.
Riot complied and it was hugely beneficial for them, since not only did they help to conserve energy usage but it also meant that the company was eligible for a windfall in carbon credits.
$9.5m in carbon credits – the benefits of mining for the environment
Fortunately, the Bitcoin mining industry is extremely resilient, especially when it has garnered enough political support to make use of government incentives and subsidies. Even though cutting down on Bitcoin mining isn’t what most Bitcoin mining companies would like to do, in this case it meant that the company made far more revenues from carbon credits than they would have done mining Bitcoin.
All in all, the company reduced its energy expenditure for the month by a total of 11,717 megawatt hours, which would be enough to power 13,121 average homes for a month, according to CEO Jason Les.
The reason that such deals are possible is because of the favourable political framework that exists for Bitcoiners in Texas. For example, The Electric Reliability Council of Texas works with miners and rewards them with the aforementioned bonuses when energy needs to be conserved. At times, such as during the floods in Texas last year, miners may even be asked to reallocate the excess energy that they are using to help to power the electricity grid. Bitcoin miners were a crucial part of helping Texans in this way during the disaster.
Many people would argue that Proof of Work mining is inefficient and damaging for the environment. Whilst there may be some truth to the fact that not all energy that Bitcoin uses is renewable, it would be remiss not to mention all of the positives that Bitcoin can offer for the environment. Helping to stabilise energy grids is an extremely important use case, and one that ought to be taken more seriously outside the US – the EU could benefit hugely from less volatility in the price of energy.
Seizing the opportunity to move machines
Many Bitcoin miners will remember the images of April 2021, in which tens of thousand of Bitcoin miners were being shipped out of China and loaded into lorries headed for Kazakhstan and Mongolia. The Chinese crackdown forced miners to cease with their efforts for a while whilst they tried to restart their businesses elsewhere.
Riot has decided that turning off the energy for the month of July is a perfect opportunity to make some amendments of their own, and will be moving some of their over 12,000 of their 40,000 miners to Whisnestone facility in Texas. Since the company was mining less BTC anyway during the month of July, it makes sense that this was a perfect time to reestablish their bases of operations.
The end of miner capitulation?
The Bitcoin hash rate has been falling over the course of the last few months as some miners are being priced out of the market, but cost of Antminer S19s has also been falling and this has invited new participants into the market.
Using data from Glassnode, one can see that miner capitulation may already have occurred. Many miners were seemingly not willing to sell their Bitcoin at higher prices, but were also forced to do so as the liquidation cascades of the last few months kicked into action. The Bitcoin mining industry is fiercely competitive, and miners should be aware that sometimes it is worth turning off their machines – if Riot mines less BTC in the correct months, but in so doing can save on electricity expenses (or even turn a profit thanks to carbon credits), then they will perform very well.
The next Bitcoin halvening will be in 2024, so there is plenty of room for Bitcoin to continue to struggle from here. On the other hand, Plan B argues that the stock to flow model is now right at the bottom of its possible trend, and has had to contend with a lot of black swan events that couldn’t have been factored into the model. If he is right, then Bitcoin has most likely already bottomed out – but only time will tell.
One thing is for certain, Riot is a mining company that plans to stay around for the long term. Recently, they announced that they are building a brand new mining hub a 1-gigawatt capacity in Navajo County. Not only this, but the maturity of the industry in the last few years means that Riot is far better capitalised than ever before, and has far more flexibility and political support than any Bitcoin miner could ever have hoped for.
Relevant news:
- Bitcoin Mining – Why this is a Great Time to Enter the Industry
- Bitcoin Miners – Compass Mining Set to Be a Casualty of Crypto Winter?
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