After China’s crackdown in 2021 on cryptocurrency mining, the United States is now one of world’s largest centers for Bitcoin mining.
By January 2022, the U.S.’s share of Bitcoin mining in global terms grew from just 4,5% to a staggering 37.8%.
With the former president Donald Trump’s crypto-friendly stance, and his recent initiatives related to the Strategic Bitcoin Reserve (SBR), American miners feel more confident about growing their business.
Mark Zalan — CEO of GoMining, a digital platform for mining — gave an insight into renewed industry optimism in an interview with ICD.
Zalan stated that “if the federal government creates a framework of crypto regulation and provides tax incentives for miners, this will help cement U.S. leadership in the global mining industry.”
The industry is still criticized for its high energy usage. According to NFTevening, mining a bitcoin requires as much energy as powering 60 U.S. households for an entire year.
Zalan discussed GoMining’s sustainable mining practices. He also explained why small miners might struggle without a mining pool, as well as how the mining infrastructure can be modified to accommodate AI workloads, creating new revenue streams for miners.
The following are excerpts of the email interview.
Mark Zalan
SEC’s position on Bitcoin mining and the Strategic Bitcoin Reserve will boost confidence
Recent statistics show that US-based pools control more than 40% of global hash rates. What is driving investment and confidence in Bitcoin in the US?
The US market is eagerly anticipating that the US will soon become the crypto capital of the globe.
Investors, both retail and institutional, were interested in the rapidly growing industry, but worried by its ambiguous status.
The decision by President Trump to establish the Strategic Bitcoin Reserve (SBR) and Digital Asset Stockpile sent a strong signal to investors, indicating that Bitcoins and other crypto-assets are now considered “clean”.
The regulators also clarify their positions on mining. For example, SEC confirmed recently that mining is not considered a financial instrument.
This gives us the opportunity to increase our CapEx and focus on creating value for investors, as well as to create more value in terms of operations.
Trump’s BTC Mining Venture is an “influencer endorsement” event for the Industry
Invezz: It was recently announced that Donald Trump’s sons will be partnering up with Hut 8 to launch a Bitcoin mining project. How significant is this news for a sector player?
The rapid growth of this sector in the face of recent regulatory changes and possible future ones is demonstrated by the partnership.
This industry is expecting new demand drivers that are significant, which will attract the attention of new players looking to make money.
Competition is good news for our customers because it encourages innovation and will raise the standards in this sector.
The event also serves to legitimize the mining industry, and is the “influencer’s endorsement” of that particular sector.
Institutional investors’ interest in BTC, mining and BTC
GoMining announced recently the launch of the Alpha Blocks Fund, a $100 million fund. Are you ready for institutions to invest in Bitcoin?
BTC mining and institutional investors have become increasingly popular.
EY-Parthenon & Coinbase, for example, surveyed 352 companies, of whom 80% plan to increase crypto exposure.
GoMining Institutional Alpha Blocks Fund allows institutional investors to access mining-backed returns with two different investment strategies.
To ensure the security and transparency of traditional markets, we created a Delaware-based closed-ended partnership and partnered up with BitGo. BitGo is a major institutional custodian.
GoMining Institutional is expanding its product offering with tokenized fixed yield funds and debt instruments, creating real returns and allowing direct exposure to BTC Mining instead of traditional equity investment.
It is a forward-looking approach that has the ability to create a new asset class, combining the traditional practices of TradFi with the yield products in the cryptocurrency space.
The US Mining Industry is a Global Leader.
How has the Trump Administration’s crypto-friendly stance affected Bitcoin mining in recent years? What policy would support the best domestic mining operation?
Trump’s administration has ushered in a new era of crypto-development, clarifying legal issues that were previously unclear and driving demand for the mining sector.
The sector is therefore able to be optimistic. The federal government can solidify US leadership in the mining industry by creating a framework of crypto regulation and introducing tax incentives for miners.
According to Treasury Secretary Scott Bessent: “Bitcoin is a game changer.”
Invezz: Bitcoin mining is a very competitive industry. The recent changes have reduced the mining rewards in half, and squeezed profit margins. This makes it difficult for small players to compete. What are your thoughts?
Bitcoin mining is still very profitable and the halvings of bitcoins are priced into every price.
It is believed that the Strategic Bitcoin Reserve, and any proposed state reserves will increase BTC’s credibility with institutional investors who are likely to drive prices up in a tight supply environment.
The introduction of legislative mechanisms at the state level to permit the investment of funds from the public sector in Bitcoin is another way of increasing demand.
What could make it difficult for small players to mine Bitcoin?
Long-term, the result will be an entirely new balance. The economies of scale will make it difficult for smaller players, and even individual miners to compete.
The large miners could also work to optimize the cost of their mining equipment, thereby increasing profits.
They should join large mining pools.
GoMining, the most popular platform in this area, has the expertise and computing power to provide the highest returns without compromising the spirit of decentralization.
Invezz There are several different cost-to mine BTC models. Can you tell us if mining is viable for small players, or if consolidation of the industry is inevitable?
MacroMicro estimates that the average cost of mining BTC is around $90,000
The Difficulty-Regression Model, a popular model from Glassnode indicates that the production cost is approximately $33,000 for each BTC.
The cost-to-mine figure does not always tell the full story. Electricity costs play a major role, but hardware and labour costs also have a significant impact.
It is natural for an industry to consolidate, at least in part. This is also a sign that the sector is maturing.
The barriers to profitability in mining are higher now, because large miners have sophisticated technology and the capital required to operate and build data centers.
Smaller players must consider consolidated solutions like pool mining to unlock economies of scale.
BTC Mining’s High Energy Consumption and Steps to Ensure Sustainability
Bitcoin mining has been criticized by many for its energy-intensive nature. How does GoMining maintain sustainability?
Our fleet runs on electricity generated by hydropower plants. This is renewable energy.
We can develop mitigation strategies for sustainability based on our scale of consumption.
Data centers are often the main consumers of renewable energies, but innovations such as crypto-mining and renewable energy complement each other.
We also find and implement solutions for reducing energy consumption as a Bitcoin Mining Council member. Our industry is committed to improving environmental standards.
Invezz – Rising energy costs are affecting mining profits. What are your strategies for hedging energy volatility?
When choosing the location of data centers, we are very strategic. A reliable and inexpensive supply of electricity is a key factor.
We take into consideration the fact that electricity prices fluctuate throughout the day.
Our team purchases electricity in bulk, allowing us to offer very low prices to everyone.
We, along with many other large mining companies, have power purchasing agreements and peak electrical energy hours in various areas to maintain a smooth and stable price schedule.
The mining industry’s margin is still positive despite the rising cost of electricity.
AI mining infrastructure can generate additional revenue
Invezz: Mining firms are increasingly diversifying or pivoting into AI-related tasks. This is a trend that will last for a while or does it represent a major shift in business models? Can Bitcoin mining and AI coexist?
Bitcoin mining is symbiotic with AI, since both require the exact same hardware.
They both require capital to be built and run, as well as financial expertise.
We can capture additional revenue as miners by providing ready-made AI infrastructure and high performance computing.
This will add to our long-term stability because we are able to perform a wider range of tasks on our hardware.
Small miners won’t be as dependent on BTC fluctuations, and they can move to other profitable jobs in the event of a price drop.
By diversifying revenue streams, this additional income stream will increase the economic appeal of Bitcoin mining and the business model’s resilience.
BTC Reserve Bills are being introduced in more States
Invezz, Texas, Florida and New Hampshire have their own Bitcoin reserve. What could be the impact of this on state competition in regards to mining regulations and incentives?
The US has a lot to learn from other countries about how they harness the power of technology.
At this time, 28 state legislators have introduced Bitcoin Reserve Bills, and several are gaining momentum.
Initial reserves will be seized Bitcoins. However, with some aiming to have Bitcoin stocks of up to 10% of the public fund, it is essential that there are clean, compliant and traceable Bitcoins available.
In return for more investment, jobs, and technology know-how, we expect more transparency from the legal framework.
The content of this post, Interview: Trump Family’s Bitcoin Mining Deal is an Influencer Endorsement and a Sign of Industry Legitimization by GoMining CEO Mark Zalan could be updated as new information becomes available
