Without cheap electricity prices, the US is proving to outperform China as a bitcoin mining superpower

When it comes to electricity and capital advantages in cryptocurrency mining, people often think of China, which accounts for 65% of the global mining power. But in terms of other measures in cryptocurrencies, the hashrate originating from the US is increasing at a dizzying rate.

This is a strange phenomenon, because the US and Canada are not places with the cheapest electricity prices in the world. However, these are places where there are many unused electricity sources and abundant electricity infrastructure for reuse. However, the decisive factor for this comes from stability and easy access to capital markets and institutional investors.

There are currently at least 23 crypto mining companies listed on the stock exchange, most of which are from the US and Canada.

” The US stock market continues to be the most favored location for crypto miners ,” said Ethan Vera, CFO and co-founder of cryptocurrency miner Luxor Technologies. ” They can raise capital through product offerings in the market, creating a solid financial approach for public companies looking to expand their operations. Foreign firms have financial leverage. More restrictions will make it more difficult to raise capital through equity. ”

Meanwhile, Chinese cryptocurrency miners face the stark contrast. While mining cryptocurrencies is legal in China, trading them is prohibited. It is difficult for operators to access bank loans, let alone listing shares to raise capital. That forces them to look for loans outside the banking system to maintain their operations.

Difficulties in raising investment capital also limit operators if they want to scale up mining, even though China is a leading manufacturer of specialized machines for bitcoin mining.

Decentralization in bitcoin mining

Therefore, although China still maintains a dominant position in the field of cryptocurrency mining thanks to cheap labor and abundant hydroelectricity, Chinese companies have started to pay attention to the US when they want to diversify. diversify your investments.

According to Peter Wall, CEO of Argo Blockchain, a company listed on the London Stock Exchange: ” Over the past few months, I have been talking to people in the crypto industry about how Chinese miners are doing. That has been said for the past few years, but now it’s actually a trend we’re seeing. Operators are always looking for greater stability, what the North American market offers and The cost of electricity as well as building plants in North America is also quite competitive and sometimes even lower than China . ”

Not only does this mean that, at some point, the United States may overtake China in this nascent sector, but in turn, it will further decentralize the cryptocurrency mining market. – an important factor for this market.

Mike Colyer, CEO of Foundry, a crypto mining investment firm, said: ” The goal is not for America to dominate bitcoin mining. It won’t happen. The goal here is to decentralize. Middle it around the world . ”

” A lot of electricity in the United States is abandoned by regulations, and hedge funds and private companies own a lot of power generation facilities .” Colyer said. ” They are starting to realize that they can make a lot of money from bitcoin mining and also make electricity production in general more efficient. They can save money from their core electricity generation.” I can also make money from bitcoin . ”

Power plant and bitcoin mining center

The combination of smart investment and energy innovation has been demonstrated by the company Greenidge Generation, a natural gas power plant in upstate New York. Its owner, the company Atlas Holdings, turned the facility into a cryptocurrency mining hub earlier this year.

Bitcoin mining facility in the Greenidge factory – on average, this facility generates about 5.5 BTC per day

Greenidge is a combined facility, meaning that bitcoin mining will enhance the stability of the electricity grid here. Connecting to the Millenium Pipeline power system, a highly liquid direct electricity market, also helps Greenidge to eliminate input fluctuations for years to come.

Tim Rainey, CFO of Greenidge said: “25 % of our total capacity is dedicated to crypto mining. The rest will be sent to the grid as needed. Before mining Bitcoin, we will send it to the grid. we normally take up to 12 hours to start up and get the power to the network when the demand is high, but now we can add up to 100 MW in an hour, which adds to the stability of the network. the grid is like bitcoin mining . ”

These advantages help the US and Canada capture 15% -20% of the global mining power of cryptocurrencies. The rest belongs to countries like Russia, Kazakhstan and Nordic countries. There are currently about 15 mining facilities over 50MW in North America, according to estimates by Taras Kulyk, vice president at Core Scientific, America’s largest cryptocurrency operator.

” Operating costs are a little more expensive in the US, but when you pour $ 100 million or even a billion dollars into a crypto mining infrastructure ecosystem, you need stability . ” Kulyk said.

Consult CoinDesk