New Regulations Promoting Bitcoin Mining in Four US States 👨‍⚖️

In this newsletter, we summarize some of the big events from this week and we will continue doing this on a weekly basis. Subscribe to get it straight in your inbox.

Here's what happened in the world of mining this week:

• Four states introduce new regulations incentivizing mining 👏 

• Iris Energy released Q2 2023 earnings 📈 

• BitNile moved 6,572 miners to Michigan 🚚 

• Hive Blockchain shares some insight on the deal with Intel 🦾

• Exceptional WBD podcast with Troy Cross and Shaun Connell 🎧️ 

Lyn Alden released her February 2023 Newsletter, great analysis of macros and inflation:

New Regulation Promoting Bitcoin Mining 🗒️ 

There are supportive U.S. regulatory developments in four states:

Oklahoma, Mississippi, Montana, Missouri

The new regulation incentivizes Bitcoin miners in these regions by allowing growth-stage miners to increase their capacity due to new industrial use laws in the region.

The states are offering tax breaks to commercial mining companies that have grown rapidly after China’s ban on Bitcoin mining.

Montana also put forth a tax exemption for digital asset mining businesses.

Likewise, the states of New York and New Jersey are working to develop their own crypto legislation.

IRIS Energy Presents Q2 2023 🦘 

• Revenue $13.8 MUSD, 722 #Bitcoin mined, $39.4 MUSD cash

• Expansion to 5.5 EH/s expected over the coming months

• 20MW at Childress nearing completion in Q2 CY23

20MW nearing completion, additional 80MW underway, 600MW total capacity. Progress update on the new sites:

• Initial 20MW nearing completion in Q2 CY23 •

  • Energization of 600MW substation

  • Commissioning of 100MW substation

  • Commissioning of 20MW data center

• Next 80MW of data centers underway

  • Orders placed for next 20MW building transformers

  • Proven modular building design

  • Existing high voltage and substation infrastructure

  • Limited earthworks required

  • Will support additional 2.5 EH/s

• 600MW of capacity secured •

  • Significant upfront investment made

  • Rapid, efficient and near-term growth pathway

Illustrative mining profit =
+ Revenue (gross revenue less assumed mining pool fees)
- assumed electricity costs

• Illustrative mining profit excludes all other expenses, overheads, and fees (except electricity costs and mining pool fees). Calculations assume mining hardware operates at 100% uptime.

• Note electricity cost assumption of $0.046/kWh is based on existing BC operations (subject to change based on the CADUSD FX rate and actual demand charges incurred).

BitNile Moves 6,572 Miners from Compute North in Texas 🚛 

BitNile has announced that it will be relocating 6,572 Bitcoin miners from a hosting facility in Texas to its Michigan data center. The decision to move the miners was prompted by the bankruptcy filing of Compute North, with whom BitNile had entered into a hosting agreement for 20MW of power.

Once the miners are fully deployed and operational in the Michigan data center, BitNile expects to achieve a mining production capacity of approximately 2.66 EH/s.

Hive Blockchain Partnership with Intel is a Hedge Against Market Prices of ASICs 🤝 

An interview on The Mining Pod with Frank Holmes, Executive Chairman, and Aydin Kilic, new CEO, of Hive Blockchain.

In the podcast, the new mining market in Texas and how it has become increasingly crowded and competitive due to the influx of miners moving to the area. This has resulted in rising costs for electricity and real estate, which is making it more challenging for mining companies to operate profitably.

They also discuss a new partnership between Hive and Intel to develop a new 130Th/s miner that will use the latest Intel chips. Hive expects the chips to help them stay ahead of the competition and improve the efficiency and profitability of its mining operations.

Hive Blockchain will have a fixed price on these miners allowing them to manage risk, when prices of miners plummet they pick up miners from the market when the price of TH/s surges they can leverage the fixed-priced miners.

Hive is not interested in getting into the business of making miners. Instead, the focus is on developing new mining technologies to improve efficiency and profitability.

In terms of Hive's future, the speakers discuss the company's plans to expand its operations to new locations and continue to innovate in the mining technology space. They emphasize the importance of staying ahead of the competition by developing more efficient and profitable mining technologies, and the need to find new locations with affordable electricity and suitable space to accommodate the growing number of ASICs required.

Texas, energy markets, nuclear and many other topics - Troy Cross and Shaun Connell on WBD ✍️ 

Troy Cross and Shaun Connell EVP Energy, Lancium, (@shaunenergy) a good follow for everything in the intersection of Bitcoin mining and the energy market.

We want to emphasize that it was a very insightful podcast - worth a listen.

Below we have summarized an interesting segment regarding Bitcoin mining stabilizing the Texas Grid, nodal pricing, energy strategies for miners, miners development into becoming solid operators

• Shaun explains how Bitcoin helped to stabilize the Texas grid during the winter storm fronts by freeing up to 1600MW of supply, proof of the utility of demand flexibility.

• The demand for electricity also drives the generation and development of more supply on the grid which can flexibly be made available in times of emergency.

• This year Bitcoin miners were able to go offline and stablilize the grid when old and non-winterized coal and natural gas plants tripped. The constant demand from Bitcoin miners of up to 1600MW freed up electricity for the grid in a time of emergency.

• Texas aims to change from zonal pricing to nodal pricing, which allows for more precision in pricing. Nodal pricing allows miners to go to areas with wind and solar, thereby driving down costs.

• The current market signals show that it is not all about mining at all costs. The focus has shifted to being profitable companies that are solid operators and control costs.

• The option value of miners is similar to that of power generators. Strategies that allow miners to earn money without mining will occur.

• The grid now has more volatility, which means that miners need to adapt their strategies. Miners now need to focus on optimizing their strategies to get maximum value on their sites.

• The behavior of miners is now similar to that of power generators in terms of their focus on maximizing value.

• The public miners were getting the big price signal if you had bitcoin on your balance sheet and you were building hash rate we're going to treat you like a gold stock.

• Signals are saying that Bitcoin is more important than doing things perfectly with how you are interfacing with the grid.

• The market signals are now shifting to the importance of being a solid operator. The key takeaway is to focus on being a profitable company that controls costs and operates effectively.