Edward Low: Wow. This is really a big question. A lot of things are happening in this industry, especially in recent months. If you are looking at Bitcoin dropping a bit and returning to stability in terms of days, it looks like the cycle is shorter than we expect. I think by the end of the year the price will be a little better, and it will go up a little. In the mining industry, you can see a lot of activities happening.
I remember that before last year, China and the US market were the two main markets for mining, mining generation hash rates, and then Chinese miners moved from the country to Kazakhstan in the first stage. And then starting at the beginning of this year we see a lot of moves into the US market, and obviously we see a lot of activity happening where you are in Texas.
Availability of cheaper electricity, relatively, as well as friendly policies as well as engineers. There are decent and well trained engineers in those industries. In fact, there are a lot of things that happen in the mining industries.
RS: Electricity prices are on the rise in the European Union and the United States, while Bitcoin continues to trade near its all-time high in 2018. ASIC prices are also down nearly 70%, and for some miners, the cost of mining appears to outpace profitability. . What are some of the capital expenditures (CAPEX) and operating expenditures (OPEX) that industrial miners have in this current climate?
EL: Well, yes. But if you look long term, the mining industry is a healthy and profitable business. Even if you look at these days in a short period, sure enough, there is a small drop. Bitcoin price and energy price are increasing. But again, if you look at CAPEX, OPEX or the profitability of the mining industry, there are many things combined.
Of course, number one is the cost of your device. The second number is your energy cost. Number three is the cost of your infrastructure. Number four is your OPEX for daily maintenance. But as far as I know, if you look at today’s machine efficiency and today’s market, average power price, average price of your OPEX, then the price of Bitcoin shouldn’t drop below $15,000 for miners to continue making a profit.
RS: Next Bitcoin Halving in about 590 days. What is the effect on the efficiency of ASICs in the range of 110 TH/s to 140 TH/s? Can you talk about the mining reward getting smaller, but the energy required to produce 1 BTC higher? How does this dynamic change as production costs rise?
EL: The machines will continue to improve. We will be more efficient when technology evolves. Of course, Bitcoin is designed in such a way that this reward halves every four years so that it becomes less and less – but that does not mean that your earnings will drop more and more. If you look at history, each half is an event every four years, and the business is still growing healthily. Mining industries continue to grow. Profit, as I said earlier, depends on a lot of things. Of course, your hardware costs, the cost of your infrastructure, operational expenses, capital expenditures as well as your energy costs. And of course, the last thing – which is very important – is the price of Bitcoin. So, there are many things together. I don’t see this trend getting smaller and smaller. I think this industry will continue as we’ve been through in the past. It is a healthy and profitable business for mining industries.
RS: Is it wrong to assume that with each acquisition, ASICs should get more powerful and therefore use more power?
EL: No, to be honest. If you look at machines and technology, even if it’s going to have 100 TH/s or 120 TH/s or 140 TH/s, the energy consumption versus the terahash – the efficiency we call it per joule per TH/s – is getting less and less.
If you look into the history of previous machines, you will find that the efficiency is more than 60 or 65 joules, and now it is down today. If you look at the market, the average efficiency is about 30 joules. And then we see by the end of this year, that every company, the three major players, will have machines or actually go to market that they have 25 Joules and even less that number. So, the machines are more efficient, and consume less energy versus TH/s.
RS: There is a growing synergy between traditional big energy and bitcoin mining, such as capturing flared gas for power generators, solar mining, and even hydropower mining. Will industrial bitcoin mining be the primary focus that actually catalyzes the mass adoption of bitcoin and brings it into everyone’s daily life?
EL: I started in this industry a few years ago, and when we started this industry, a lot of Chinese entrepreneurs were mining. They were all passionate individual entrepreneurs who believed in the industry. I assure that an individual entrepreneur or enthusiast in China starts
