Bitcoin ‘Fundamental Value Does Not Match Market Price’ — Crypto Miner – Interview Bitcoin News

According to the assertion of the founder of a Bitcoin mining company, profitable bitcoin mining is essentially the result of an efficient and highly skilled team of professionals who are able to preserve uptime. Therefore, even when the price is hovering around $20,000, mining a bitcoin with these features can work profitably.

‘Bitcoin Fundamentals Rarely Change’

The drop in the value of bitcoin from just under $30,000 at the beginning of June to less than $20,000 by mid-month is believed to be one of the factors that contributed to the collapse and bankruptcy of major crypto assets like 3AC and more recently Voyager. However, these two high-profile entities are by no means the only ones seriously affected.

Many market participants, including Bitcoin miners, have had to contend with the increased risk of bankruptcy as well as having to deal with lower prices. As the situation at 3AC shows, many market participants were, or still are, using excessive leverage. Another significant drop in prices could lead to more bankruptcies.

However, for other market participants like BTC miner Permian Chain, a further drop in top crypto price is unlikely to have much impact on the company’s long-term plans. According to Mohamed El-Masri, founder and CEO of the Canadian-based cryptocurrency mining firm, the core value behind bitcoin is what motivates them. Al-Masri also clarified via email to News that the crypto asset’s short-term price volatility and accompanying media headlines alone cannot cause the Permian Chain to change course.

Below are the rest of the Permian Chain CEO’s responses to questions emailed to him by News. News (BCN): The continued downward trend of crypto-asset prices has led to the collapse of some of the major players in this space. There is no doubt that Bitcoin miners are also facing the heat. Can you explain to our readers how a bitcoin price below $20,000 affects miners?

Mohamed El-Masri (MM): The over-leveraged situation facing some of the major bitcoin miners is largely the result of global macroeconomic factors pushing energy prices through the roof and putting downward pressure on equities and crypto markets. The massive sell-off on crypto exchanges was widely triggered by security vulnerabilities and, to some extent, the neglect of overly leveraged market participants who were forced to liquidate some or all of their bitcoin and other digital assets to meet its debt. payments.

A bitcoin price below $20,000 will certainly not yield the extraordinary returns that bitcoin miners have experienced above $45,000. However, most industrial bitcoin miners use next-generation, high-efficiency ASIC equipment where they can stay profitable, assuming they can keep their power costs in the $0.05/kWh and $0.10/kWh range. Smaller miners without economies of scale and low-cost energy sources are definitely mining below their breakeven point. However, profitable bitcoin mining is largely the result of an efficient and highly skilled team of professionals who can maintain uptime even in a $20,000 bitcoin market.

One of the core features of Bitcoin, the Difficulty Adjustment Algorithm, we must not forget the Difficulty Adjustment Algorithm, which rewards miners who stay online during low market cycles because other miners shut down their equipment for profitability, defaults, insolvency or any other reason. The key to win and win is to take advantage of Above, stay online with as many hash rates as possible for as long as possible.

BCN: What has been the impact of falling crypto prices on Permian Chain’s operations?

AA: Permian Chain will continue to mine bitcoin regardless of market prices. Headlines and market conditions change, but fundamentals rarely change. The core value behind Bitcoin is what we are in this business.

As for our mining sites, we have established a regular relationship with our energy providers by implementing our energy-as-a-service and bitcoin mining platform to facilitate our efforts. For example, Permian Chain works closely with our energy generator and facility manager in Alberta, Brox Equity, to streamline a vertically integrated value chain; From onsite fieldwork to online software solutions, we can sustain mining and sustain operations.

BCN: If prices drop further, will it still be profitable for the Permian Chain to continue mining?

AA: It all depends on what you see as profitable. Probably not, if we are talking about a dollar value to evaluate profitability. But if we look at profitability from a bitcoin perspective, yes. In my personal opinion, the underlying value is not in line with the market price of bitcoin. It takes time for basic information to become understandable by the masses.

I believe bitcoin mining is a powerful value creator if you have a ten-year outlook for your bitcoin investment. It is also crucial to understand that if the Bitcoin price continues to drop, it is very likely that many miners around the world will start to shut down. If enough miners stop their activities, this will put downward pressure on the difficulty setting. The lower the difficulty ratio, the less difficult the mining process. As a result, this increases a miner’s chances of winning bitcoin more often than when the difficulty ratio is high.

The difficulty ratio measures how hard an ASIC mining machine must work to validate transactions on the blockchain (resolving transaction blocks in exchange for bitcoins as a reward). With lower difficulty rates, miners can find and solve blocks faster, which allows them to earn more bitcoins in the same time frame with the same energy cost and therefore more profit.

BCN: The Permian Chain uses what you would call low-cost energy from flared and stranded energy sources for data mining centers. Can you explain why the Permian Chain chose to use this energy source?

AA: Permian Chain is an energy-as-a-service platform for computing infrastructure that started with bitcoin mining. We aggregate all energy resources on the platform to help energy producers around the world monetize and tap into their wasted and stranded resources through our tokenization processes and Smart Off-Take Agreement (SOTA). We are focusing on disconnecting Bitcoin mining from the grid and it so happened that we started with natural gas as our first natural energy source, as this is where solving the challenges is most important from an ESG perspective, which makes our solution very clear. use case.

BCN: In what geographic locations is it possible to profitably mine bitcoin using flared and stranded energy resources?

AA: Each jurisdiction is free from regulations, labor costs, raw material costs, overheads, etc. Since they have different standards, this depends on several factors. All of these affect your net power cost. I hear a lot of talk about low-cost power in certain areas, but I can easily assume that many of these so-called “opportunities” don’t affect the other costs I’ve mentioned. To have a clear understanding of your operational expenses, you need to take all these costs into account. Having said that, I believe anywhere between $0.05 and $0.10/kWh should be considered low cost and demonstrate effective overall cost management. Considering we’re also off the grid.

BCN: Some environmental groups have said that a change in bitcoin coding would likely remove its environmental impact. Do you agree with this argument?

AA: Change in coding? What should we change from? I don’t believe Bitcoin will or will change… it will only continue to grow at the rate of adoption and increase its efficiency through Layer 2 technologies and improved next-generation equipment. Companies like Intel and Samsung continue to produce next-generation chips that will improve mining efficiency.

As for the environmental impact, Bitcoin will continue to need mining “data center” facilities, just as the internet runs on data center facilities that consume 2% of the world’s grid power. However, Bitcoin is the world’s largest computer and consumes only about 0.4% of the world’s electricity. The majority are out of renewable and clean energy sources. The Bitcoin mining trend is also towards off-grid energy sources such as clean hydro, solar, and most likely responsibly produced natural gas in the near term.

BCN: Can you briefly explain how your tokenization platform works?

AA: Energy companies register themselves and their resources on our platform. We review submissions before they are approved. Once approved, resource projects can go through two tokenization paths; (1) through a security token offering to accredited investors with the help of broker-dealers registered on our platform; and (2) by issuing Smart Exit Agreements (SOTAs) that allow our network of mining partners participating in our mining pool aggregator to stake their stablecoins on energy projects in which they are interested in placing ASIC miners. This latter process allows energy companies to get early support from miners and commercialize their energy sources by deploying off-grid power onsite for bitcoin mining.

BCN: Both Africa and the MENA region – where solar power is apparently plentiful – still make up an insignificant portion of bitcoin mining. What could be the reasons for this or what do you think should be done to attract miners to these two regions?

AA: In countries and regions where energy is predominantly private, such as North America, innovation and new business models are easier and faster to understand and implement. The MENA region is nationalizing its energy resources. It takes longer for governments and regulators to follow innovation at the same rate as free markets. I believe we can expect to see an influx of miners and foreign investment from around the world, especially when MENA governments openly announce regulatory frameworks regarding bitcoin mining. PermianChain makes it possible for regulators and governments to clearly understand projects, enjoy low-cost reconciliation, and allow for enhanced transparency.

What are your thoughts on this interview? Let us know what you think in the comments section below.

Terence Zimwara

Terence Zimwara is an award-winning Zimbabwean journalist, author and author. He has written extensively on the economic problems of some African countries and how digital currencies can provide Africans with an escape route.

Image Credit: Shutterstock, Pixabay, Wiki Commons

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