A crypto miner explains how Bitcoin mining stabilizes networks

According to Jaime Leverton, CEO of Hut8 mining company, one of the largest cryptocurrency miners and digital asset experts in the space, 2022 has been a “perfect storm” for Bitcoin (BTC) miners.

Leverton sat down with Gareth Jenkinson, Cointelegraph’s chief correspondent, in an interview at the World Economic Forum in Davos, Switzerland. Topics included were the bear market of 2022, Web3 diversification, and most importantly, Bitcoin’s growing positive impact on the environment and the wider economy. Leverton shared that 2022 is a tough year for miners:

“Obviously depressed Bitcoin prices, global hashrate continues to hit all-time highs, and then the energy crisis gets mixed up. So it’s certainly been a tough time, especially in the mining industry.

The Bitcoin hash rate, the ease with which miners can find a new block on the Bitcoin time chain and receive the block reward, has risen higher in recent months. This is despite the price of bitcoin falling below $20,000. Mining profitability went down as the hash difficulty increased. As a result, there have been several Bitcoin and cryptocurrency losses throughout 2022.

Hut 8 Bitcoin Mining Corp Since January 2018. Source: Bitcointreasuries.net

Leverton explained that a diversified strategy combined with a successful M&A plan helped avoid bankruptcy risks for Hut 8, one of the world’s largest publicly traded Bitcoin and cryptocurrency mining companies.

The group recently established a “bitcoin and mining repair facility for customers in Canada and Northern Europe”. Leverton emphasized that the move seeks to fill a gap in the market for digital infrastructure providers in the Web3 space:

“As they try to build these decentralized platforms, they become really dependent on traditional Web two hyperscalers. Obviously, when you’re building a decentralized network, you don’t want to do it on a centralized infrastructure.”

Once a buzzword in the cryptocurrency space, Web3 has since become the hottest trend attracting over 10-figure investments from Hong Kong to Abu Dhabi in 2023. Hut 8’s entry into Web3 may prompt more Bitcoin-using companies to consider opportunities in the Web3 space.

Shares of Hut 8 Mining Corp. They are the largest Canadian miner and the fourth largest publicly traded company in the world. Source: BitcoinTreasuries.net

The interview concluded with an elegant discussion about bitcoin mining and its role in protecting the environment. Leverton is a founding member of the Bitcoin Mining Council, an organization dedicated to dispelling misinformation about Bitcoin mining and “To address some of the misinformation being spread about Bitcoin’s energy usage; energy sources”.

Leverton explained that Bitcoin’s transparency may actually be its Achilles heel:

“Part of the challenge we face is that Bitcoin’s energy usage is very transparent. Unlike any other industry in the world, their energy consumption is opaque. In relation to Bitcoin mining, you can see the energy produced because Bitcoin is actually digital.

In contrast, it is a Sisyphean task to quantify the entire energy output of banking or traditional finance, although it has not stopped some Bitcoin proponents from trying. In a recent interview with cryptographer Michel Khazzaka, he estimates that Bitcoin uses at least 56 times less energy than banking.

Related: Seven Times Bitcoin Miners Made the World a Better Place

Leverton explains that there can be a disconnect between Bitcoin mining and its positive impact on both the environment and the economy. “It starts with education,” he said. Leverton, a native Canadian, gives an example of how Bitcoin mining has created jobs, stimulated the economy and even provided tax receipts in a small town in Alberta.

“We’re their largest energy customer, their largest taxpayer, and their primary technology, labor provider, and in some cases, we want to talk about redundancies with the city of Medicine Hat.”

Additionally, Bitcoin mining can help stabilize networks. Texas recently toyed with the idea of ​​using Bitcoin miners to use software to further balance the supply and demand of electricity on its grid. Like Texas, Canada tolerates extreme temperatures. Wild variations require expert grid balancing.

Snow storm in Alberta. Source: CBC.CA

Leverton explains how bitcoin mining can support the network in Medicine Hat, another example of Bitcoin mining’s role in supporting environmental efficiency:

“And with any surge, during a snowstorm, if there’s any kind of peak demand activity, we can take all 62 megawatts off and feed the grid, we can cut the power and feed the full amount or as little as half a megawatt.”

Most importantly, given that Bitcoin miners are the largest tax payers in the region where Hut 8 operates, conversations and awareness among policymakers can be facilitated.