The State of Bitcoin Mining

Mining is back, baby!

Earlier this week, Denver-based miner Crusoe Energy Systems announced the opening of their fourth bitcoin mining facility in the Rockies, having recently closed $70 million in new funding from several A-list investors like Bain Capital Investors, Founders Fund, and Polychain Capital.

The company is the most recent of a cohort of firms who have set up shop in the U.S. to take advantage of the recent shale boom, including Bitmain and DCG-backed Layer1. What’s interesting is that these data centers merely use excess natural gas supply that would otherwise be lost to “gas flaring”, when the energy companies literally burn capacity because they have too much inventory that might be more expensive to store or ship.

How about that? Energy-efficient miners!

It’s a welcome narrative development, and necessary from a network risk standpoint to diversify mining capacity by country.

CoinShares published its latest report on Bitcoin mining trends yesterday, which found that one Chinese province, Sichuan, accounts for 54% of global mining. (China dominates in general with 65% of total capacity.) While that's risky geopolitically, it's also maybe a net positive for the environment?

Today, 90% of the capacity in Sichuan is powered by renewables, while the U.S. is firmly in the burn, baby, burn fossil fuels camp.It's tough to get excited about bitcoin mining as a business, but if Bitmain’s U.S. IPO does pan out (they've already filed a confidential registration document with the SEC), I’d expect it to spark more infrastructure development in the U.S. in 2020, despite the challenges the upcoming May halving might bring the sector.

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