Unlocking the Power of Bitcoin Mining: A Comprehensive Guide to Sustainable and Profitable Mining with Hashlabs
info@hashlabsmining.io
Øyvind Sjaastad
October has been an interesting month for the Bitcoin mining industry. A significant number of new miners have connected to the Bitcoin network, making this industry more competitive than ever before. We’ve also seen miners continue to explore the HPC/AI narratives, slow capital markets activity and local protests against bitcoin mining.
In this article, however, we delve into Ethiopia’s rise on the African mining scene, examine the latest entrant into the bitcoin mining efficiency race, and discuss why we could see Bitcoin-backed loans gain traction among public miners. Let’s dive in.
Ethiopia is Leading the Bitcoin Mining Revolution in Africa
Africa has emerged as one of the most promising future mining hubs. The continent has numerous regions with cheaply available renewable power, creating attractive opportunities for adventurous bitcoin miners.
Ethiopia, leveraging its abundant hydroelectric resources and a relatively blockchain-friendly regulatory regime, has emerged as Africa’s leading destination for bitcoin miners. The nation-state has reached a point where over 600 MW of power is allegedly dedicated to Bitcoin mining, according to Ethan Vera. Further, the state-owned electric power supplier, Ethiopian Electric Power (EEP), has confirmed their support for the industry, and recently revealed that several hundreds more MW of mining activity are expected to come online this year, thereby enchanting Ethiopia’s potential footprint on the global mining scene.
The current mining capacity in Ethiopia is able to support around 19 EH/s of mining capacity, which represents between 2% and 2.5% of the global network hashrate. This number we could see grow to 5% in the not-so-distant future as miners continue to flock to this exotic mining destination. Overall, Ethiopia's emerging role in Bitcoin mining underscores Africa's growing importance in the global digital economy and highlights the mining industry’s responsiveness to energy availability, power costs, and regulatory regimes.
Curious about mining in Ethiopia?
Don’t hesitate to reach out to Hashlabs — we will help you get started mining in Ethiopia through a hosting setup with highly competitive electricity rates.
Could Bitcoin Become a More Popular Collateral Asset for Miners?
Marathon Digital announced access to a $200 million credit line with an undisclosed third party in mid-October. The loan will be backed by a portion of their massive 27k Bitcoin stack, and the company stated that the money will be used to capitalize on strategic opportunities and for other general corporate purposes.
Marathon is not the only company that has made use of Bitcoin-backed loans. Since 2021, public bitcoin miners have set up credit facilities backed by bitcoin worth a total of $740 million. While this accounts for a relatively small amount of the overall capital these mining companies have raised during this period, these bitcoin-backed loans provide capital flexibility to support operations and expansions without requiring the miners to liquidate their bitcoin holdings, an advantageous opportunity in the dynamic and volatile bitcoin mining industry.
Marathon’s new Bitcoin-backed credit facility may seem like a small development on its own, but it signals a broader trend we believe will continue in the coming years: Increased use of bitcoin-backed credit facilities among public mining companies. Why? Because bitcoin's unique properties make it the ideal collateral asset for miners holding large bitcoin reserves. Let me explain.
Bitcoin possesses a unique combination of characteristics that is unmatched by any other asset class. Bitcoin is available for trading around the clock, every day of the year. It is the most portable asset ever created, allowing for instant, frictionless, cheap transactions worldwide at any time, with full settlement guarantees. It also carries neither counterparty nor credit risk. Together, these attributes make Bitcoin a very good collateral asset, as they ensure that a lender who takes possession of the collateral after a loan has defaulted easily and rapidly can convert the collateral asset to cash at any time. By contrast, mining hardware, previously widely used as collateral during the 2021 bull run, presents challenges for lenders that attempt to convert these assets to cash, primarily due to their lower market liquidity.
For these reasons, we believe there is a good chance that we will see more Bitcoin-backed loans among miners with large bitcoin reserves in the future. These loans provide greater operational flexibility for the miners, allowing them to capitalize on growth opportunities without selling off their precious bitcoins.
A New Competitor Enters the Bitcoin Mining Efficiency Race
On October 24th, the publicly listed Bitcoin mining company Bitdeer introduced its latest-generation mining rig, the Sealminer A2. This new rig boasts an impressive hashrate of 226 TH/s and an efficiency of 16.5 J/TH, making it one of the most powerful mining rigs currently available.
The Sealminer A2 ranks as the third most efficient mining rig on the market. As the chart below shows, it is only surpassed by Bitmain’s S21XP and S21 Pro models, which offer efficiency levels of 13.5 J/TH and 15 J/TH, respectively. This makes the new Sealminer A2 a viable option for efficiency-hungry mining companies that are looking to expand their operations in the near term.
We expect Bitdeer’s emergence in the Bitcoin hardware sector to heighten competition within the bitcoin miner manufacturing landscape. This sector has historically been dominated by a small group of manufacturers, including Bitmain, MicroBT, and Canaan, but the increased competition could now serve as a catalyst for technological innovation. As companies vie to create the most efficient machines, miners could benefit from the development of improved hardware that consumes less energy per terahash, ultimately enhancing the mining profitability their owners can harness.
In addition, Bitdeer is working on its next-generation SEAL03 mining chip, which is projected to deliver an unprecedented efficiency of 10 J/TH. The upcoming Sealminer A3, powered by the SEAL03 chip, is anticipated to reach a wall-mount efficiency level of approximately 12 J/TH, setting a new benchmark for the industry. Bitdeer aims to launch the SEAL03 chip by Q4 2024, suggesting that the Sealminer A3 may be available in the near future, potentially further revolutionizing mining rig efficiency standards.
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