Avi Felman says he’s optimistic about bitcoin miners, but not solely because of bitcoin’s potential.
With the focus on high-performance computing (HPC) deployments, companies are finding new ways to expand their revenue streams beyond ASIC mining.
Hut 8, best known as a bitcoin mining company with offices in Alberta, Canada and Texas, is a great example, he says. Thanks to its powerful computing infrastructure, Hut 8 recently signed a contract to provide HPC to customers in the Canadian healthcare sector.
In a recent 1000X Podcast (Spotify/Apple), GoldenTree’s Head of Digital Asset Trading talks to Cumberland’s Global Head of Trading, Jonah Van Bourg, about expanding their revenue strategy.
It’s not about the hardware
With the growing potential for more cash flow, one might expect mining companies to pack their ASICs into greener pastures, leaving behind the precarious business of crypto mining and its razor-sharp profit margins.
But it’s not about the chips, Felman says, “it’s a whole different business.”
Rather, it’s about access to the facilities and the people who know the business, says Felman. For example, cooling is important in any high-capacity computing environment, he says. “Both Bitcoin mining and HPC, they have all of that set up.”
“You have the people who know how to build these services. They have the camps and the facilities. They have the electricity contracts.”
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The actual product that is made available to customers is, according to Felman, “fundamentally different and requires a significant upfront investment.” But the overall processes are very similar,” he says.
Big miners like Hut 8, Iris Energy, Hive, and Cipher can repurpose facilities to provide HPC, diversify the business, and generate more revenue, Felman says. “It seems like there is tremendous demand.”
A healthier bitcoin market to boot
Felman clarifies that current ASIC hardware — highly specialized computers designed solely for bitcoin mining — must not be misused to provide HPC to customers. But diversifying the services provided by their infrastructure and expertise could allow mining companies to be financially “healthier,” he says.
He argues that the move could also benefit the Bitcoin (BTC) market price as miners could potentially come under less pressure to sell in fearful markets. The need for mining companies to regularly sell their fresh bitcoin just to survive is a constant drag on prices.
“Miners are liquidated less often as they become better, more resilient businesses.”
Van Bourg adds: “It would certainly make the market healthier.”
“It would also tell the world,” he says, “crypto has deployed a number of infrastructure games that are relevant beyond just cryptocurrency.”
The move indicates the existence of a growing market for “purpose-specific computing equipment,” says Van Bourg. He says Bitcoin mining technology has “laid the groundwork for other applications” that can now use the technology in new ways.
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