The cold snap is severe for bitcoin mining experts. These players, almost unknown to the general public but who operate the most famous cryptocurrency by ensuring the validation of transactions, are in turmoil. The biggest of them, the American Core Scientific, filed for bankruptcy on December 21, 2022, just as the “blizzard of the century” was hitting the territory of the United States, putting the power grid under pressure. A coincidence of timing that underlines the close dependence between the mining of virtual currencies and the energy crisis.
Read also: Article reserved for our subscribers After the fall of the FTX platform, cryptocurrencies in search of confidence and regulation
The economic model of a miner is simple: he runs thousands of computers to be the first to solve the mathematical equation proposed by the algorithm of the bitcoin network in order to validate a transaction and thus pocket a reward in the form of of virtual currency. Its income is therefore directly indexed to the price of bitcoin, while its expenses are correlated to the price of electricity consumed by computers. In 2022, between the cryptocurrency crash and soaring energy prices, the pain was therefore doubled.
The fall in profitability has thus prompted some players to amend their strategy. “The rise in the price of fossil fuels has led to a massive cessation of mining based on electricity produced from coal and gas, in favor of wind and hydroelectric sources”, assures Nicolas Louvet, CEO of Coinhouse. At the last count of the University of Cambrigde (United Kingdom), which calculates an index of the electricity consumption of bitcoin, renewable energies represented 26% of the total at the beginning of 2022. A share which should therefore, according to the defenders of cryptocurrencies, be ‘increase.
Redeem a virtue
In fact, to balance their economic model, miners compete in inventiveness. “Computers used for mining are increasingly installed in containers that can be moved, underlines Alexandre Stachchenko, blockchain & cryptos director at KPMG France. Installed at the foot of renewable energy infrastructures that are by nature intermittent, they can serve as an adjustment variable by consuming the electricity produced in periods of low demand and therefore cheap. On the contrary, in the event of strong tensions, they can stop their activity very quickly. » Then move easily to other places of energy production.
You have 21.36% of this article left to read. The following is for subscribers only.