Tag: Mining Decentralization

Barred From China, BIT Mining Has Started Moving Bitcoin Mining Operations To Kazakhstan

by Bitcoin Magazine

Following power cuts to its bitcoin mining operations in China, BIT Mining is moving rigs to Kazakhstan.

Bitcoin mining company BIT Mining, owner of the BTC.com mining pool and the corresponding domain name, announced today that it has successfully transferred the first of three batches of bitcoin mining machines from China to Kazakhstan. The company expects to deliver 2,600 mining rigs total to the Central Asian country by July 1, 2021.

“We are committed to protecting the environment and lowering our carbon footprint,” Xianfeng Yang, CEO of BIT Mining, commented in the announcement. “We have been strategically expanding our operations overseas as part of our growth strategy. Following our investments in cryptocurrency mining data centers in Texas and Kazakhstan, we are accelerating our overseas development for alternative high-quality mining resources.”

The first batch of 320 bitcoin mining machines recently delivered to Kazakhstan, capable of around 18.2 peta hashes per second (PH/s), is expected to begin operation in Kazakhstan in under five days. However, BIT Mining’s largest share of hash rate in this transfer will be delivered through the second and third batches. Combined, they will amount to 2,600 machines and have a 102.3 PH/s hash rate capacity.

BIT Mining’s total hash rate capacity is far greater than this total though, with its BTC.com mining pool accounting for 9,741 PH/s –– around 9% of the Bitcoin network’s total hash rate. This move to Kazakhstan is part of the company’s overseas deployment strategy. Over the coming quarters, it plans to ship its remaining mining machines to other data centers outside of China.

BIT mining’s overseas deployment strategy was likely born from the recent bitcoin crackdowns in China. In mid-May, the country’s state council shared a statement saying that the government would “crack down on bitcoin mining and trading behavior and resolutely prevent the transfer of individual risks to the society.”

According to the announcement, the company’s indirectly held subsidiary, Ganzi Changhe Data Center, received a notice from the Sichuan State Grid informing it that the grid would cut its power supply by June 19. This notice hence confirms that Sichuan was reportedly issuing shut down orders to bitcoin miners in the province. BIT Mining’s data centers in Sichuan, including Ganzi Changhe, contributed to around 3% of the company’s total revenues in May 2021, per the announcement.

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Has Sichuan Power Rationing Impacted The Bitcoin Hash Rate?

by Bitcoin Magazine

After rising electricity demand and low rain, bitcoin mining operations in Sichuan, China have been restricted. How is the network responding?

According to local news outlet China Times, the state grid in Sichuan’s Aba county issued a notice on May 16 demanding energy-intensive enterprises in the area to temporarily cut down their power consumption, effectively rationing energy usage of any bitcoin mining operations in the region.

The local government set up the Sichuan hydropower grid to attract power-intensive industries to utilize excess electricity produced by the heavy regional rains during the Southwestern Chinese summer. Consequently, the region has become a hotbed for bitcoin mining operations and many mining farms are usually transferred from Northern fossil fuel power plants to Sichuan to take advantage of energy excesses.

But this year’s unusually warm month of May, coupled with the current low volume of rain in the area, results in a rapid increase in electricity demand from the general public — taking a toll on the grid’s power supply capacity.

As a result, the state grid has demanded that enterprises cut down on their energy consumption until further notice. Therefore, Bitcoin mining operations, which are abundant in Sichuan for its highly available and inexpensive hydroelectricity, have been operating with limited capacity since that state grid request.

Although the correlation is hard to prove as causation, the Bitcoin network’s hash rate has dropped by more than 20% in the two days following the notice, according to data from Glassnode. However, Bitcoin’s hash rate almost fully recovered by the next day, and it is now just 5% below the pre-notice levels.

The possible impact of Sichuan’s power rationing on the Bitcoin network’s hash rate over the coming months is uncertain. It is unknown when the state grid will lift the limits, but it is reasonable to expect it to happen soon as the rainy season in the region gradually reaches its peak from June to September. Furthermore, China Times reported that miners in the Sichuan area expect the situation to improve after May 25.

Incidents like this recent one in Sichuan often raise questions as to whether bitcoin mining is too concentrated in China and the associated risks that would come with that concentration. However, there has been a trend toward greater decentralization of bitcoin mining as it slowly moves away from China. In particular, the North American bitcoin mining scene has been heating up, with opportunities arising in different places across the U.S. and Canada.

As Bitcoin’s hash rate further decentralizes, the more resilient and resistant the network becomes to regional-specific incidents and the less the hash rate will drop due to such events.

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Bitcoin’s Global Hash Power Balance

by Bitcoin Magazine

Flex Yang is the CEO of Babel Finance, a leading cryptocurrency financial services provider based in Asia.

What Are Some Key Factors In “Winning” The Global Hash Power War?

In 2021, the bitcoin market is surely reaching an inflection point, as its market cap surpassed $1 trillion. Bitcoin’s ecosystem has seen evolutionary growth and structural change, but there are noticeable trends that have been disrupting Asia’s bitcoin mining industry, from the continent’s declining share of hash power to the rapidly changing regulatory environment. However, there is more to this trend than meets the eye.

To determine whether the East or the West will ultimately obtain the greatest share of the global hash rate, we need to examine not only how many new mining machines a miner is able to obtain in today’s market, but also the local regulatory environment.

Asia’s historical dominance in Bitcoin hash power is slowly declining, at least for now. The Asian mining industry’s glory days as the top player are now being challenged by Western newcomers. Although China is home to the most powerful mining machines and largest mining farms, Chinese Bitcoin infrastructure is at a crossroads in its development. On the one hand, Asia’s hash power is still topping the charts globally, whereas the U.S. and Canada accounted for less than 10% of global hash power in 2020. On the other hand, the shortage of mining machines has beleaguered the majority of Asian miners, and they have lost out on hundreds of millions of dollars in profit by continuing to mine on older machines.

Since the second quarter of 2020, most new mining machine orders have been placed by foreign mining companies in the U.S. and Europe. Many Asian miners did not react quickly enough to the shock of the March 12 bitcoin flash crash, and their deteriorating finances and a bleak industry outlook left them unable to place orders for newer machines. Today, many small miners are now struggling to compete with larger institutional mining firms, not just in China, but also in the U.S. This trend is reflected in the rise in demand for Babel Finance’s mining machine loans, of which $40 million in machine-backed loans were distributed in March 2021 alone. This gives miners a capital edge when they purchase new machines.

To see that bitcoin mining is surging in popularity, we don’t have to look any further than Digital Currency Group’s subsidiary Foundry, which secured a landmark deal with Chinese mining manufacturer MicroBT. The deal involves co-locating 14,000 units of MicroBT’s latest WhatMiner M30S for institutional investors in the North American region. The deal was announced after MicroBT set up its first offshore (outside of China) manufacturing facility to cater to the increasing demand from the West.

So far, global hash power has mainly been driven by the availability of mining machines, but ultimately, a larger driving force behind how hash power is distributed globally may be a regulators’ outlook on Bitcoin’s future potential and their willingness to play along.

The attitudes of government regulators can have dramatic effects on how competitive the top players are globally. The outcome of the global hash war has yet to be determined: although the U.S. might be catching up, the results are not certain. A warmer attitude and flexible regulatory environment could maximize the country’s Bitcoin infrastructure growth success, or government stifling could risk losing the biggest fintech innovation and any future lead.

Canada’s leading position in Bitcoin ETFs (Evolve Funds Group and Purpose Investment) and U.S.-based Coinbase’s IPO are great examples of what regulators can do to promote or hamper the growth of a region’s bitcoin markets. In addition, across the Pacific, at the local government level in China’s Sichuan and Yunan Provinces, officials encourage the use of energy that would otherwise be wasted in the region.

In Sichuan Province, the wet season starts in May and runs through October. Roughly 60–90 kWh that would have gone to waste because of inefficiencies in local power transmission and conversion were instead used for bitcoin mining. Mining farms in China tend to be established in a way that not only prevents energy waste but also creates economic opportunities and benefits both local citizens and governments.

The daily miner revenue hit an all-time high of $77,500,000 on April 16, 2021 according to a recent story published by Bitcoin Magazine. The support of the mining industry at the provincial level in China has been responsible for boosting and securing the country’s hash power dominance, but for now, the U.S. is managing to secure the lion’s share of the new mining machines. In the future, concerns over environmental pollution could become a thorny issue for U.S. firms. Clear, flexible government guidance on bitcoin mining will pave the way for miners to operate without regulatory risks.

In the long run, widening the distribution of hash power is positive for the industry’s development. Satoshi’s design of Bitcoin is based on the premise of a fully decentralized system. Although the Asian miners’ hash power dominance once stirred unease in the West, the current shift in market dominance has reestablished confidence in the system, ironically, thanks to international differences in the regulatory environment.

This is a guest post by Flex Yang (with contributions by Yiwei Wang). Opinions expressed are entirely their own and do not necessarily reflect those of BTC, Inc. or Bitcoin Magazine.

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A Hitchhiker’s Guide To Bitcoin Mining In North America Part Two: Seeking Stranded Energy

by Bitcoin Magazine

In his introduction to Michael Saylor’s recent conference “Bitcoin For Corporations,” Ross Stevens, founder and CEO of Stone Ridge and NYDIG, spoke about the importance of energy to bitcoin, and how bitcoin mining will create new economic hubs in areas where stranded energy exists.

Until now, human settlements have been located near transportation hubs, he noted, not energy hubs. But the need for cheap, abundant energy like hydropower makes bitcoin mining a natural pioneer in those areas where industries like forestry and pulp and paper have exhausted resources and moved on, leaving energy infrastructure behind.

In “A Hitchhiker’s Guide To Bitcoin Mining In North America,” we attempted to sketch out the rough outlines of the emerging bitcoin mining ecosystem on the continent where much of this energy pioneering is and will be taking place. We listed mining pools, mining companies, financial services firms and firmware companies.

In this second part, Bitcoin Magazine is continuing this journey of discovery to shed more light on what this new mining ecosystem looks like and, more specifically, what sources of energy are available and being used.

But this is no easy task. In digital asset firm CoinShares’s report on bitcoin mining from December 2019, the researchers expressed the difficulty of trying to pin down an accurate picture of where miners work and what energy they’re using:

“…while we do our utmost to accurately pinpoint the location of global mining centres, the Bitcoin mining industry remains a highly private and secretive industry,” they wrote. “As a result, our estimates may be subject to significant potential uncertainty.”

The North American Energy Landscape

There is a lot of anecdotal evidence that North America is experiencing a new gold rush as mining companies stake claims, form partnerships and order large inventories of the latest ASIC technology.

North America is a new mining mecca, primarily because there’s lots of cheap, “stranded” energy in the region, making it a new frontier for mining companies and investors, according to Marty Bent of Great American Mining and Harry Sudock of Griid, who discussed the matter on a recent podcast about mining and energy.

For example, British Columbia and Quebec, two of Canada’s largest economies, were built on resource extraction, mainly forestry and traditional mining. But many of the region’s lumber and pulp and paper mills powered by hydroelectric dams have moved on or closed, leaving power sources and infrastructure behind.

Areas of Washington State and Upper New York State have similar advantages — lots of cheap stranded energy from a time when manufacturing dominated the region and factories needed to be near power sources to be economical.

In light of the ongoing debate about the environmental impact of the energy that bitcoin miners use, it is helpful to know the terrain.

On this front, China presents a relatively clear picture — mostly hydropower in the rainy season and coal and natural gas in the dry season.

But many U.S. states have a mix of power sources on the local grid, often including coal, natural gas, nuclear and hydro power. This makes it difficult to pin down power sources used by individual companies.

But despite the difficulty of pinpointing precise energy allocations, it’s clear that this region is attracting a significant proportion of bitcoin mining operations, particularly from Asia.

“The migration of hash out of China over time by existing players is very, very rapid and they’re very motivated,” said Bent on the recent podcast. “So, if you’re operating on any of those hydro facilities in China, there’s significant seasonality. You’re already moving cash in between locations. And so they’re incentivized to avoid those switching costs to migrate to regions where there is stable access to power.”

It’s the nature of bitcoin mining that miners “seek out extremely cheap sources of energy which tend to be stranded renewables or fossil fuels like natural gas and oil via flaring or venting that would otherwise be wasted,” added Bent.

And it’s not just Chinese miners that are looking for a new frontier. A growing interest in mining from institutions like investment funds is spurring growth in the U.S. and Canada as established investors look for areas with not only cheap, abundant energy but a degree of political and regulatory certainty.

Underscoring the types of uncertainty these investors hope to avoid in China, there are reports that China’s government will be regulating miners working in Inner Mongolia and Xinjiang in an attempt to curtail the use of coal.

This may help make North America a more attractive location for Chinese mining companies.

Shifting The Energy Paradigm

Cambridge University’s Centre for Alternative Finance is studying the use of energy in bitcoin mining and has developed its “Cambridge Bitcoin Electricity Consumption Index” to try and gauge the amount of power consumed by the bitcoin network, broken down by individual regions.

The center calls its results “an educated guess” due to the many variables, including location, that are still largely unknown. Researchers used aggregate data from three mining pools that are based in China — BTC.com, Poolin and ViaBTC — as samples for its projections.

The resulting “Bitcoin Mining Map” shows the average monthly hash rate (power usage) broken down by country. At the time of this writing, China leads the world at more than 65 percent of total energy use, while the U.S. contributes 7.24 percent and Canada 0.82 percent.

The Cambridge Centre is also studying the kind of energy used in different parts of the Bitcoin network. In a September 2020 report, it found that 76 percent of surveyed mining operations used renewable energy as part of their energy mix. Hydroelectric power was found to be the most used source of energy, with 62 percent of respondents indicating that this source powered their mining operations.

Coal was the next-most-used energy source, with 38 percent of respondents indicating that it powered their operations, and natural gas came in third with 36 percent of respondents indicating that it powered their operations.

CoinShares has also studied the use of energy on the network and has estimated how much energy use is derived from renewables. It noted the mining industry is “notoriously opaque” making it difficult to analyze with certainty.

In its December 2019 report, it pegged the use of renewables at 73 percent, making bitcoin mining one of the cleanest industries in the world:

“…we calculate an estimate of the renewables penetration in the energy mix powering the Bitcoin mining network at 73 percent, making Bitcoin mining more renewables-driven than almost every other large-scale industry in the world,” according to the report.

The future development of bitcoin mining in North America is the future development of stranded energy.

In his remarks at “Bitcoin For Corporations,” Stevens called bitcoin the “most profitable use of energy in human history that doesn’t need to be located near human settlements,” saying that bitcoin will change the economics of energy.

Though the exact energy sources are difficult to parse, it’s clear that the story of bitcoin mining in North America is the story of bitcoin finding this game-changing economic use case for the energy industry. As Austin Storms, the director of product and engineering for Great American Mining put it on Twitter recently, this is a paradigm shift on par with the advent of the internet itself.

Appendix: Bitcoin Mining Companies in North America

Below is a partial list of Bitcoin mining companies based in North America, along with their specific regions of operation:

Canada

Alberta:

  • Hut 8 Mining

    • Drumheller

    • Medicine Hat

  • Upstream Data


British Columbia:

  • DMG Blockchain Solutions

    • Christina Lake

  • Iris Energy

    • Canal Flats

  • MaaS Blockchain

    • Lower Mainland

  • Ocean Falls Blockchain

    • Ocean Falls

Quebec:

  • BitFarms

    • Brossard

    • Cowansville

    • Farnham

    • Magog

    • Sherbrooke

    • St. Hyacinthe

  • Blockstream Mining


  • HIVE Blockchain Technologies


U.S.

California:

  • Plouton Mining


Colorado:

  • Frontier Mining

Georgia:

  • Blockstream Mining


  • Core Scientific

Idaho:

  • XTRA Bitcoin


Illinois:

  • Blockware Solutions


Iowa:

  • Vortex Blockchain Technologies

    • Des Moines

Kentucky:

  • Core Scientific

Maine:

  • Northern Data Systems


Minnesota:

  • Compute North

    • Eden Prairie

Montana:

  • Marathon Patent Group


Nebraska:

  • Barefoot Mining


  • Compute North


New York State:

  • Greenidge Generation


North Carolina:

  • Core Scientific


North Dakota:

  • Crusoe Energy Systems

    • Bakken Oil Fields

  • Equinor

    • Bakken Oil Fields

  • Marathon Patent Group

Ohio:

Oklahoma:

  • Riot Blockchain

    • Oklahoma City

Pennsylvania:

South Carolina:

  • Treis Mining


South Dakota:

  • Barefoot Mining

    • North Sioux City

  • BitMOR Mining


  • Compute North

    • Sioux City

Texas:

  • Compute North

    • Big Spring

Utah:

  • Orem Mining

Virginia:

  • BitFrontier

    • Fredericksburg

Washington State:

  • Bitmain Mining

  • Elite Mining

  • SCATE Ventures

West Virginia:

Wyoming:

  • Wyoming Mining


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Chinese Mining Pool Poolin Acquires North American Competitor NovaBlock

by Bitcoin Magazine

China-based mining pool Poolin, which contributes the second-largest amount of hash rate of any single entity on the Bitcoin network, has acquired NovaBlock, a North American pool with offices in St. Jose, California and Calgary, Canada. The takeover will net Poolin an additional 1,681.83  petahashes per second (PH/s) in mining capacity, per data from BTC.com, further increasing its hash power dominance.

In a recent announcement, NovaBlock, which launched in 2019, outlined the planned hash migration, which will take place today. According to BTC.com, Poolin manages a hash rate of 21,909.37 PH/s, so the addition could bring it up to around 23,591.2 PH/s. The world’s largest bitcoin mining pool would still be China-based F2Pool, which has a hash rate of 27,918.42 PH/s.

Poolin is headquartered in Hong Kong and has offices in Beijing, Chengdu and Changsha, China, as well as in Singapore and Berlin.

“I’m guessing Poolin forecasts there will be significant hash rate growth here in North America, and they want to position themselves to have exposure to it,” said Ryan Porter, BitOoda’s head of business development, in an interview with Bitcoin Magazine. “Prior to the acquisition, NovaBlock controlled 1 percent of the Bitcoin network hash rate. There is now a growing field of competitors entering the North American mining pool space, and a number of global mining pools that are expanding their product offering, so the acquisition puts NovaBlock into an incumbent that could keep them competitive and bring stability.”

In its announcement, NovaBlock noted that “Poolin is looking to expand their reach into growing regions like North America.”

As the bitcoin mining industry in North America continues to grow (the number of North American mining pools has more than doubled in the last year, growing from three to seven), it’s possible that more major pools in China will follow Poolin’s lead and look to acquire mining participants based in the U.S. and Canada.

There is growing recognition that U.S. regulators may be increasingly turning their attention to the mining space and the role of Chinese pools. Ethan Vera, co-founder and CFO of Seattle-based mining pool Luxor, told Bitcoin Magazine that miners may be looking for more accountability and stability than Asian pools have to offer.

“North American miners will increasingly want to sell their hash rate to a counterparty that is based in the same legal jurisdiction,” Vera said. “Service license agreements, legal recourse, high profitability and good data and stats are top of mind for institutional miners in 2021.”

See Also

With some of its highest hash rates ever, the Bitcoin mining industry has weathered a harsh 2020 and increasingly moved away from China.


In a comment on Bitcointalk.org, a member called Newbie expressed a preference for working with a pool closer to home:

“I was going to try NovaBlock out later this year to see what the profit was going to be but now maybe not,” Newbie wrote on February 6, 2021. “I was mainly drawn to the concept of a North American pool with ownership and control centered in North America.”

With bitcoin reaching new all-time price highs, interest in mining is only bound to increase.

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Blockstream Buys $25 Million Of Bitcoin Mining Hardware From MicroBT

by Bitcoin Magazine

Bitcoin infrastructure company Blockstream has announced a $25 million purchase of the latest Whatsminer bitcoin mining rigs from MicroBT to be run across Blockstream Mining’s facilities in North America.

Blockstream Mining was launched in 2019 with an intention of bringing more of the global hash rate to the West. The largest mining rig manufacturers and mining pools are headquartered in China, which some see as a dangerous geographic centralization of Bitcoin’s most critical industry. Today, Blockstream Mining offers colocation services for institutions interested in entering the space, maintaining facilities in Quebec and the State of Georgia.

“The WhatsMiner purchase cements Blockstream Mining’s position as one of the largest Bitcoin mining operations in North America,” Adam Back, the CEO of Blockstream, said in a release shared with Bitcoin Magazine. “With over 300 megawatts in capacity available and fast-growing demand from institutions looking to get involved in the Bitcoin gold rush, we’ll continue to grow aggressively throughout the year.”

According to the release, Blockstream led the testing of the Whatsminer M30S series outside of China, so this large order can be interpreted as a sign of confidence about its performance.

“Right now, there’s no better mining hardware on the market than MicroBT’s Whatsminer miners,” Samson Mow, Blockstream’s chief strategy officer, said in the release. “We’re excited to continue our relationship with MicroBT and this latest batch will provide our hosting clients with an extremely reliable foundation to contribute to the security of the Bitcoin network.”

See Also

With some of its highest hash rates ever, the Bitcoin mining industry has weathered a harsh 2020 and increasingly moved away from China.


A rise in the bitcoin price and growth of mining operations around the world has meant that mining rig manufacturers maintain months-long waiting lists for new equipment. But MicroBT’s partnership with financial services firm Foundry Digital means that North American mining groups Compute North and Hut 8 are poised to receive new Whatsminer M30S rigs soon as well.

$11.8 million in financing allowed Hut 8 to purchase 5,400 new Whatsminer M30S rigs, adding 475 petahashes per second to its mining capacity. It would stand to reason that Blocksteram’s $25 million purchase would yield it more than twice that, but the release did not include specifics about the number of rigs or hash rate increase it is expecting.

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A Hitchhiker’s Guide To Bitcoin Mining In North America

by Bitcoin Magazine

Like a hitchhiker taking to the American highways for the first time, anyone hoping to get a clear picture of the universe of bitcoin mining today might be perplexed at the seeming opaqueness, yet sheer size of the North American mining ecosystem.

As a miner recently advised new entrants into the space on Twitter:


Distinct from China, which leads the world’s mining hash rate with an estimated 65 percent of the total coming from pools headquartered there, the North American mining environment is evolving its own culture.

As the North American bitcoin mining scene heats up with a higher hash rate, and an increase in mining revenues, more investors and interested mining companies are looking for a guide to the new mining Wild West that is the U.S. and Canada.

There are four basic parts that make up the North American bitcoin mining ecosystem: Mining pools, mining companies (collocation and self hosting), financial services firms and firmware (software) providers.

However, sometimes a financial services firm can also be a mining company (as with Galaxy Digital), and sometimes an energy provider can also be a mining company (Greenridge Generation). It’s complicated.

The Rise Of The (Demand For) Machines

Mining equipment shortages, not just in North America but around the world, including in China, is currently a big issue in the industry.

As the price of bitcoin continues to reach all-time highs, there is pressure on ASIC foundries and equipment manufacturers to try and meet the demand from both newly-interested customers and older mining companies that need to upgrade to remain competitive. 

Estimated wait times for new mining equipment are at least six months, with leading manufacturers like Bitmain sold out until September 2021. There has also been a significant price increase in the secondary market for used ASICs.

We asked Samson Mow, CSO for Blockstream and Blockstream Mining, how things look for bitcoin miners going forward into 2021. Mow told Bitcoin Magazine that the defining issue going into 2021 is the lack of ASIC-based mining equipment:

“Bitcoin hash rate growth for the next year is likely to be constrained by ASIC chip production,” he said. “This could lead to some very interesting new financial products related to mining… With a shortage of equipment and a booming bitcoin price, a lot of older mining rigs are now profitable to run again for miners that have access to low-cost power.”

Mow confirmed what most experts say about mining equipment — at this point in time, there’s no new technology anywhere in sight to beat the mining power of an ASIC chip.

This is positive news for some established miners with access to cheap power, as the difficulty rate is more favorable without intense competition. There are some of these in North America, even though the region is also attracting new entrants.

“Mining profitability rose this year because the rate that new hardware is being deployed has significantly lagged the price increase of Bitcoin, which means that there has not been an increase in hashpower competition coinciding with the price rise,” Ryan Porter, head of business development for financial services firm BitOoda told Bitcoin Magazine.

Time For Your Own Pool, Kids

Most miners, including North American miners, use mining pools based in China. But this is changing as new mining pools are setting up in the U.S. and Canada to offer miners more regulatory-compliant options.

There are at least seven North American mining pools today, up from only three a year ago.

In the last six months, Luxor, Blockstream and Novablock have been joined by Titan, Blockware, DMG Blockseer and a Marathon/DMG co-op pool. 

Luxor Pool is publicly listed and DMG Blockseer is in the process of going public, as is the Marathon/DMG co-op pool (more on this later).

Big Institutions And Energy Companies Are Getting Involved

As with investment into bitcoin the asset — which has enjoyed a price rise widely credited to involvement from major institutions like Square, MicroStrategy and Grayscale — mining has come into the sights of institutions looking to augment their portfolios with some financial hash power.

According to research conducted by Fidelity Digital Assets and Greenwich Associates, nearly 80 percent of institutional investors find something appealing about digital assets, and more than six in 10 institutions believe that digital assets have a place in their investment portfolios. 

BitOoda, like other financial services firms in North America, is working with investment companies to help them get set up in mining ventures. Some prefer being directly involved with a specific mining operation while others are only looking for an investment stake for their portfolios.

See Also

With some of its highest hash rates ever, the Bitcoin mining industry has weathered a harsh 2020 and increasingly moved away from China.


There are also power providers in the region that are putting the extra power they have in off-peak hours to use in mining bitcoin. Greenridge Generation in New York State is putting its extra power to work through the night and in other off-peak hours mining bitcoin. Crusoe Energy, a Denver-based power company captures waste gas from flaring to create power — much of which is used for mining bitcoin.

North American Mining Companies Want To Go Public

Like bitcoin miners globally, North American miners have preferred to remain relatively anonymous, but there’s a new breed of mining companies and mining pools that are trying to get out into the open, ahead of any government attempts to regulate the industry.

Some of the motivation for getting ahead of the regulators is to become qualified for a public listing on a stock exchange, an effective tool for raising capital.

“The appetite for mining firms to go public has never been greater, as publicly-traded mining companies Riot Blockchain, Marathon Patent Group and HIVE Blockchain have all passed a $1 billion valuation,” Porter said.

And a few regional players are already publicly listed. Canadian mining company Hut8 was one of the first mining companies to be listed on the Toronto Stock Exchange. Meanwhile, NASDAQ lists Riot Blockchain (NASDAQ:RIOT), Marathon Patent Group (NASDAQ:MARA) and HIVE Blockchain Technologies (OTC:HVBTF).

Regulators Enter The Room

Until recently, bitcoin mining was not an issue for government regulators, but increasing attention to regulating cryptocurrencies from government agencies like the U.S. Securities and Exchange Commission, Financial Crimes Enforcement Network and Commodity Futures Trading Commission may soon change that.

It seems inevitable that at some point, a regulatory eye will be cast over mining.

“We feel that companies will be willing to pay standard mining pool fees (i.e., 2 percent) for full transparency and ensuring their servers/miners are not involved in adding North Korean or Iranian or other blacklisted wallets from OFAC in moving Bitcoin,” Sheldon Bennett, the COO of DMG Blockchain Solutions, told Bitcoin Magazine recently.

When DMG teamed up with Marathon to form DCMNA, it pledged to only process transactions that complied with U.S. laws.

In its announcement, DCMNA said it will be audited by a third-party financial firm and will be using “clean block mining” that adheres to the Office of Foreign Asset Control’s (OFAC’s) compliance standards and reduces the risk of mining blocks that include transactions linked to questionable activities.

Profits from the DCMNA pool will go toward pro-miner lobbying efforts in Washington, D.C. and all of the miners participating in DCMNA will need to submit KYC information, including smaller companies renting space in DMG’s warehouses. 

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Compute North, Foundry Digital Partner To Bring More Bitcoin Mining To North America

by Bitcoin Magazine

Compute North, one of the largest bitcoin mining companies in North America with mining farms in Big Spring, Texas; Kearney, Nebraska; and North Sioux City, South Dakota, is taking a great leap forward through a new partnership with financial services firm Foundry Digital, a subsidiary of Digital Currency Group based in Rochester, New York.

Through the partnership, Foundry will supply 14,000 new Whatsminer M30S mining rigs from MicroBT to be hosted at Compute North’s North American colocation facilities. Compute North will commit 47 megawatts of power to these rigs beginning in the first quarter of this year. The goal is to provide an avenue for Bitcoin mining investment for more North American businesses.

“After the first batch of procured devices comes online, most of the devices will be available for purchase,” per a press release shared with Bitcoin Magazine. “Investors can either purchase the operating devices directly from Compute North or finance them through Foundry with a down payment at a fraction of the device cost, and get the mining machines running at Compute North’s enterprise-class facilities almost instantly after purchase.”

As the price of bitcoin continues to reach all-time highs, there is pressure on ASIC foundries and equipment manufacturers to try and meet the demand from both newly-interested customers and older mining companies that need to upgrade to remain competitive. Estimated wait times for new mining equipment are at least six months, with leading manufacturers like Bitmain sold out until August 2021.

This partnership could help interested parties realize gains from bitcoin mining more quickly.

“Investors from publicly-traded companies to family offices and more are perking up and realizing that there is money to be made in digital currencies,” Dave Perrill, the CEO of Compute North, told Bitcoin Magazine. “It has been a smaller asset class but continues to build momentum as they see the opportunity to diversify a slice of their assets in this alternative investment strategy.”

The New Face Of Mining In North America 

The partnership between Compute North and Foundry is part of a growing trend in Bitcoin mining, particularly in North America.

Financial and advisory companies like Foundry, BitOoda and Galaxy Digital are becoming main players in helping institutions with their financing, staking and operating new mining sites.

See Also

The team at Luxor has introduced Hashrate Index, a website featuring data that adds some transparency to the bitcoin mining industry.


Mining is also coming into the purview of bigger institutions as institutional investors also become main players in larger and more sophisticated mining operations.

“Another driver for diversification with cryptocurrency is a result of the recent economic challenges and election results,” noted Perrill. “With Biden winning the election and his economic team assembled, the Federal Reserve will continue to print even more money to stimulate the economy and keep his campaign promise. Increased inflation will continue the acceleration of the dollar decline, encouraging smart money to move to digital currencies.”

Foundry And MicroBT

In September 2020, Foundry negotiated a partnership with equipment manufacturer MicroBT in order to gain priority access for North American institutional buyers to new M30Ss as they came off the production line. (MicroBT is gaining ground as a leading ASIC manufacturer, although Beijing-based Bitmain is still the number-one manufacturer of mining equipment. According to CoinDesk, MicroBT sold 600,000 Whatsminer units, worth more than $500 million in 2019.)

As part of its partnership with Foundry, MicroBT set up shop in a country in Southeast Asia to act as a supplier and avoid the U.S. tariff of 25 percent on equipment imported from China. Bitmain also avoids U.S. tariffs by using a production facility in Malaysia.

Source

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