Despite all the benefits of Bitcoin mining, the industry faces dangers. Indeed, regulators, governments or even the emergence of AI technology can hinder its development.
In this new and final episode on Bitcoin mining, discover the expert’s analysis of the potential risks Daniel Batten.
Will Bitcoin miners abandon their ASICs and move towards AI?
Like Elon Musk who declared that he was less interested in cryptocurrencies, but rather in AI, the emergence of artificial intelligence could contribute to the drop in hash rate.
Indeed, Bitcoin mining companies could decide to use their data centers and hardware to invest in AI. As a result, the mining industry would lose momentum and leverage. Could this then push her towards her downfall?
“Remember that these high-performance computing centers do not have 80% of their operating budget in electricity. It could be around 30%. Now if they become more intense power users, it could go up to 40, 45%. But it will never be as high as Bitcoin. So this means they are more likely to be a second customer than a first customer. This is exactly what happened with Crusoe Energy for those of you who don’t know. They raised $500 million in investment to take this blowout gas from the oil and gas industry and stop it from entering the atmosphere, but to redeploy it and put it into generators, and use it to do bitcoin mining. And they had about 120 megawatts powering Bitcoin mining. And then they were like, “Hey, now we have these generators here and we have our operation set up. Hey, we could do some high performance computing on the side.” Because with high performance computing you always need a redundant generator. So you need two generators, if the first one fails. Because you have to provide this high availability, you have to be on almost all the time. And they were like, well, we can just use the Bitcoin miner generator as our redundant generator, so we don’t have to buy a second generator anymore. So that immediately changes the cost equation.”
Indeed, due to the fact that Bitcoin miners do not fear an interruption, they allow diversification in the use of computing powers in data centers. And diversity in the use of computing power means diversification of income. Obviously, Bitcoin miners can then become much more resilient in the face of a potential bear market and a fall in the price of BTC. Because this drop in price is one of the predominant factors in the closure of a Bitcoin mining company.
Like Riot Platforms which recently purchased an additional $250 million worth of Bitcoin miners, Bitcoin miners can notably recycle heat. For others it will becarbon credits or water and cooling.
“So this is going to help make these bitcoin mining companies more resilient during bear markets, which is in everyone’s interest because no one wants these mining companies to be liquidated. Because as we know, when they get liquidated, they sell their Bitcoin, they sell their Bitcoin, and then the price of Bitcoin goes down. So if they have more resilience, if they’re doing this high-performance computing, that means they’re more resilient during the bear market, which helps the whole ecosystem. So it’s positive. The other thing about high performance computing is that it has different needs. They need a good Internet connection. Or, they take a larger terrestrial footprint. So some of these remote places like landfills are unlikely to be a solution. I think it’s great for the ecosystem because more resilient miners can deploy more, and therefore can stick with it. So they are not going to sell their Bitcoin. And they’re going to continue to include Bitcoin mining regardless.”
It is therefore this resilience and this possibility of diversifying income and uses of power and energy that allows the Bitcoin industry to resist the emergence of AI. Bitcoin miners have everything to gain from staying in Bitcoin mining.
Can regulators kill the mining industry?
Another sensitive point is the regulation around the industry. As a reminder, China banned it and caused a decentralization of the industry. Indeed, the effect was actually the opposite of what they hoped for, as the mining industry found itself strengthened by this ban. But can it still be endangered by regulatory bans?
“People can try crazy things. Politicians can influence what voters think and feel through the information that is disseminated. If you look at those who have circulated the most FUD on Bitcoin, it is the central banks. In particular an employee of the Dutch National Bank. It comes from the European Central Bank…And that sort of thing fuels a narrative.”
Indeed, Alex De Vries is the perfect example of this continual FUD. And in Europea vote was taken for ban proof-of-work.
“Even if the worst happens and there was a statewide ban, which I think would be extremely unlikely, but it’s not impossible. And if that happened, then Bitcoin mining units would simply move to countries that are friendly to bitcoin mining. That’s already happening because of some of the policies that have been put in place by New York State, it’s discouraging Bitcoin mining in New York State. One of the first things we do is we look at the nation and we say, do they have a Bitcoin friendly policy? Because it’s a risk.”
Conclusion: what should we remember and what to focus on for the future?
“There will be a role for, for nuclear certainly because there will be a reserve capacity that these nuclear suppliers have, and which they cannot use. Hydro, there will be a lot of water that will just be wasted. It gets spoiled because it’s a wet season. There’s a huge role for people who want to do hydromining. There are a lot of people moving to Paraguay right now because there is this massive Itaipu Dam and they can sell the electricity to Brazil at a reduced cost. solar energy and wind. Then there’s a role for people to become innovative with oil wells which, again, release methane into the atmosphere. You can use the recycled heat energy to do whatever you want. You can heat your apartment or do anything, heat your hot water. I see people getting very innovative with this, and it’s a huge area too. This is another potential use. So I think every kind of bitcoin mining is going to grow.”
As revealed by Daniel Batten, the Bitcoin mining industry has only 14 years old. Nevertheless, it has already achieved the feat of removing 6% of its broadcasts each year. Much more than any other industry. And when we know that innovation still needs to be explored, the future is with Bitcoin. Facts Against FUD!
Source: Original
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