24 Jan 2022

Will power producers soon FOMO into bitcoin mining?

Miners refine electricity into bitcoin and earn a massive spread doing it. How long will the energy industry sit on the sideline watching their bitcoin mining customers get rich before deciding to join the fun?
Source: Hashrate Index, Bitooda
Bitooda estimates the median power price in the bitcoin mining industry to be $40 per MWh. Per MWh deployed, a miner can mine bitcoin worth $230, corresponding to a cash flow of $190. Power producers generally sell their electricity in the wholesale market for much less than the $230 they could have earned by mining bitcoin.Bitcoin mining is a location-agnostic process, meaning that it’s possible to mine bitcoin practically anywhere. Co-locating a bitcoin mining facility with a power plant is, therefore, generally not a problem.By co-locating a bitcoin mining facility with a power plant, a power producer can choose between selling the power to the grid or using it to mine bitcoin – depending on what is the most profitable at any given time. The additional option of mining can increase profits and reduce risks for the power producer.Some power generators, like Greenidge Generation, have already installed bitcoin mining facilities directly at their power plants and are switching between mining bitcoin and selling electricity to the grid.The co-location model is just one of many ways the energy industry could take advantage of bitcoin mining. With a potential for diversifying and increasing revenue streams by mining bitcoin, the number of traditional energy companies experimenting with bitcoin mining will certainly increase. Ultimately, we may see a high degree of vertical integration in the industry, with the same companies owning energy assets and bitcoin mining facilities.
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