Crypto Miners Trying to Survive Winter

Let's talk about this the big crypto and Bitcoin miners the way they're Rebranding the the kind of the two Positions here just to kind of set it up For you all is there's an idea that that The miners should focus on mining and Not and not diversify however there's This whole other side of the token that Says diversify uh Rebrand move into High-powered Computing that sort of Thing this article is coming from Coindesk as well so some of the new Business lines are more profitable than Bitcoin mining but not all Bitcoin Miners are trying to survive in icy Crypto Winter by broadening the scope of Their business both in name and in Practice on January 4th one of the Biggest publicly traded Bitcoin mining Firms announced it was swapping the Blockchain out for its name or of its Name for platforms the rebranding two Riot platforms was to underpin an Increasingly Diversified business it is Not the only firm making a name change In the past year miners have worked to Diversify their revenue streams into Other products and services using energy Intensive data centers Some did so in response to brutal market Conditions While others took steps to Prepare for a downturn when business was Still going strong the strategy is the Opposite of what we've seen in the past

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Bull markets where publicly traded firms Would add the word crypto or blockchain To their names and see their share surge More than a hundred percent in the day Even if the company had no viable crypto Related business plan and I remember That happening for sure now quote There's a general Desire by companies to Distance themselves from the crypto Bubble of the last couple years end Quote said D.A Davidson analyst Chris Brendler quote it makes it easier when You're dealing with more traditional Finance institutions end quote exactly How much of this wave of corporate Rebranding and Promises of new business Lines is just talk or talk to pump stock Valuations in a depressed market and Whether it will last is yet to be Determined it depends on how profitable It will be to diversify as we see with The last bear Market many miners are Pivoting their public narratives as a Diversified business so they don't face Solely the struggling mining valuation Said Ethan Vera Chief Operating Officer Mining service firm Luxor Technologies Just like traditional commodities Bitcoin mining is an extremely Competitive and capital intensive Business with minors competing for an Asset that is limited in quantity there Are only about two million more Bitcoins That can be mined until the Bitcoin

Network reaches a cap of 21 million Assuming the current bitcoin price of 25 000 per token the total value of Bitcoin To be mined works out to about 50 Billion dollars that amount is super Finite said Lucas pipes an analyst at Investment Bank Bri fight B Riley Financial with many miners adding Constant competing power to mine the Limited amount of Bitcoin facing a whole Business model on mining alone may not Be viable so companies are looking to Repurpose some of their computing power For other Industries and services this Includes selling high performance Computing to firms in Industries like Artificial intelligence and cyber Security others are looking to Capitalize on energy markets either by Owning their own assets or selling Energy back to the grid quote if you Want to have a a market cap of 50 Billion and what good CEO doesn't want To have a high market cap you need to do Something else as well pipe said however Many strategy or strategies binders are Implementing to diversify could do more Harm than good high performance Computing Services take away from their Core Business according to D.A Davidson Brother Bradley DEA Davidson's brendler Excuse me brendler thinks miners are Probably better off just focusing on Mining Bitcoin instead of entering a new

Sector and taking on clients that need High powered Computing and compete Against established Tech firms such as Amazon and Microsoft and what about Miners trying to sell energy to the grid That's just another sign of the Difficult times he said One of the ways miners are diversifying Their revenues is by leveraging their High energy consumption in close ties to The power grids this is just what you've Been talking about earlier right so I Think we can kind of move that that's One strategy I think the second play That we need to kind of Define here Because we've I think we've defined that One quite well already in today's Episode is the high performance Computing play miners entering the high Performance Computing Market are Essentially hitching the wagon on a mega Trend that should last for many years B Riley's pipe said Bitcoin miners are Uniquely positioned to compete in high Performance Computing as most of them Already have data centers and access to Low-cost power said lexors Vera now A side note here I think like if you Have a bunch of Bitcoin miners though it It's not You you have to change the actual Hardware that you're running to to make This play Now they're going to use an example here

And they they and that isn't Bitcoin Mining right however the high Performance competing Market is very Competitive and miners lack the Infrastructure and capabilities of Already established data center Operators the Computing industry is a Business geared to face customers Vera Said and many Bitcoin miners don't Exactly have sales divisions in early 2022 Canadian Mining Company Hut 8 Mining bought five data centers from Terra go for about 22 million dollars Which had grown to 14 of its Revenue by The end of the third quarter that's more Than its mining hosting business was Bringing in quarterly last year Diversifying into the wider world of Compute is essentially catching a rising Tide be Riley's pipe said the industry May ebb and flow and it might be riskier Depending on the clientele but overall It's a growing sector Zao estimates that Gross gross margin Four high dates high performance Computing segment has remained about 50 Through 2022 while its mining margin Dropped to 34 in Q3 for comparison Operating margins for major Computing Firms such as Amazon web services and Microsoft are reportedly in the 25 to 40 Percent range I think that's really all we need to Cover I do want to clarify

First of all Hut 8 was heavily leveraged Into GPU mining not only that they had Custom gpus from Nvidia directly which Puts them in a very unique position when It comes to high-powered Computing the Whole Miner with a GPU rig is not Necessarily in the position to adopt This type of strategy this is a strategy That is adopted by essentially High-powered Computing servers that are Going to be able to run these gpus in a Buy 8 configuration which means that you Have to have essentially More PCI Lanes which means more CPUs Which means more memory all these types Of things go into the cost of this and This is also something actually that We'll probably be talking about a lot More in the GPU mining space with things Like proof of useful work from flux Right so it's a really interesting topic But I think that unfortunately the way This article was written they kind of They're saying Bitcoin miner HUD 8 but If you understand the industry you Understand that that very important Distinction right Today's sponsor is BT miners BT miners Has been a long time sponsor of the Channel and a proven reliable source for Asic miners if you're looking to Purchase Asics Hardware from Bitcoin to Dogecoin miners they are available for Purchase on BT miners is a trusted Source by both and follow the affiliate Link in the description and tell them so Sent you to support the channel Yeah so yeah to jump on that the None of the Bitcoin miners out there That are just Bitcoin those are Asics Um and those Asics are made to do one Thing to process Shaw 256 transactions As fast as Theo not a thermodynamically Possible on five nanometer seven Nanometer architecture so you're not Repurposing that to do anything besides Bitcoin mine Um and most of the facilities are Structured in a way that they're Designed for that that you know if it's What's minor or any of the other form Factors to fit on a shelf so and they're Not in a necessarily what I would call a Clean environment either even some of The nicer locations like uh that have Relatively good filtration and airflow They're still super Dusty Um so they're not really quality data Centers and anybody that has any Experience in the data center world It isn't necessarily about how powerful Everything is it's your security because You're dealing with things that are have To do with pii information cui Information Um but you know which is a very

Important who has access to those Servers they're usually locked up There's Halon because you have financial And critical Services running on them so There's a decorum in a design that has To be met from a data center activity Uh so at best most of those things with Like HUD 8 typically would be something Like just a render farm so it's stuff That if you lose it it doesn't matter You just re-render right so Um it's just a job load that it's taking And then it's it's outputting something So to to refactor a crypto mine to a Data center Um not even getting just for those Reasons is typically not what you would Do so it's kind of being semi Mischaracterized uh on agent you're Gonna have way too much power than what You actually need as well right yeah and You're yeah yeah gpus don't use near Um you know HUD 8 when they were Redesigning with the you know the custom Nvidia gpus Um and they did have like a server set Up you know with the you know dual xeons And lots of uh memory and a fiber Channel back in with a full you know Fiber optic connection Um but you know when you start talking Data centers especially HPC data centers Um something like Oak Ridge something Like you know like one of those that are

Very purpose-built those are as fast as That compute is and that that by eight Uh you know pcies 8.0 across you know 8X Across all Lanes uh you know quad you Know Xenon platinum or you know the top End AMD uh processors those things are Made like With the fiber channels that are you Know put into the back of them are you Know 10 gig to 100 Gig plus right Because everything needs to talk at a Rate of speed from an input output Standpoint so this is part of the reason Why render and all that kind of stuff Took very small jobs single St you know Sit files if you're trying to do 3D Modeling at a singular level it's not Going to go render a Disney movie right So there's a lot going on there so you Know you could have some of the GPU Farms that were kind of set up like this I'll use Merkel for example that it had A pretty recent you know deployment Large facility was one we visited uh you Know half a year ago that was something That they could set up to do some Limited compute it was designed with you Know the basic servers that were put in There were enough to where you could do Some like uh clustering you know on the On the compute side however again it's Just it's it's not like a data center it Won't compete with like an Amazon type Of price point you're gonna have to go

Cheaper And some of those data centers like Amazon and all that other stuff uh you Know they're gonna have you know fire Suppression they're gonna have all these Other things that we would normally have In a in a crypto Farm Um the cooling is going to be it's going To be a cooled environment where these Are going to be kind of in the warm Environments or you know HUD 8 has them Literally in containers right so Um you know from a security standpoint So I I don't know I see it as kind of Like it might be a split hedge of what It is uh stuff that maybe mining pools Are doing or if you're a large enough Miner for the ordinals things very Interesting we were talking about that Earlier Um because now if you're large enough Bitcoin miner you could leverage that Kind of off-chain uh posting of a block To where now it's not necessarily doing The on chain competing for fees Um you have a whole other side business Now that is just capturing maybe Somebody that will really wants to get That picture in the next block type of Thing so you could generate a lot more Revenue for the pool operators Um you know the one of the questions That we're going to be hopefully talking To Luxor here soon I was trying to get

Something we were actually trying to get Talk to them this uh today Um one of the questions I have is like Okay you guys are doing a lot of this Stuff but are you guys how are you guys Keeping track of off-chain transactions Um and how does the minor that's mining That's creating the the the weight on Your network of for giving you enough Hash rate how are they able to uh Validate you know what's being included Now that bonus of a block you know like It may you should see a bump and a yield But now how how do you work to work to Make that transparent I think that's the Kind of next phase I get it why it comes Off a line in the beginning because You're trying to get a person that's Trying to work a deal Um but how do you snap that line to see That it's that you know if they paid you Thirty thousand dollars in fees and You're given 18 000 in fees which is significantly more Than what normal blocks are like what's The Delta there what's your margin you Know can you make that exposure to Margin you have a plan to make that Exposure to margin because then that's Going to get into a whole other rabbit Hole and all these different Um you know Foundry starts doing it if Everybody else starts doing it because They see that hey it's a viable business

Model Um then now we're not going to see Um you know the transparency that that Bitcoin's doing and I see that's why Some of the Maxes get really fired up About it of like you know this is bad This is a bad move the incentives are Are not right and I think the market Ultimately dictates If the if people get the win if mine This is the interesting thing about this Community about mining in general if the Miners feel that they're getting robbed Or that wait a minute like am I getting All what you're doing I get that you're Going to take a margin but if you're if You're making more money I'm just going To point my stuff to another chain or Another pool right and very quickly I Want to say it's like cancel kind of Thing but like very quickly people could Move off of uh off of the pool right so It's a it's a balance that each of these Pools are going to beholden to to make Sure that they're not gaming the system For their own immediate gain because Miners are actually giving them the Weight of uh that pool so I think it'll I think it's naturally going to go into A good behavior and there's a natural Order to make sure that it's exposed I Think it's just one of those phase one Is does this work phase two is okay how Can we make this transparent you know

What I mean like right because the first Person that does that two now sets the Standard because then everybody's going To be like well at least they're showing Me what the hell's going on here you Know and everybody should make money and What they're if your business and you're Operating a function You're you have to create Revenue that's The way you stay in business right so I Never like I was telling people never to Apologize for taking a profit for trying To better your business expand your Business right if you're doing things Like with a framework that allows you to Do that But like You got given the the the structure of The way Bitcoin mining works and the way The mining in general works if you start Gaming that system for your own personal Gain you're probably going to get Wrecked in the in the end because people Are going to decide that hey that's not That's not what we like was it F2 pool Is it like had all those issues with Their internal exchange it went from Like top three to I think it's like Number four now like People say like these exchanges won't go They are not exchanges but sometimes say Like these pools are too powerful and They're not going to go anywhere but I Mean in reality like they do that oh

Overnight it's a config change like we We leverage awesome minor right now to Manage our 1200 Asics on there and I Have a good we have a good relationship With them for that Um you know we pay their fee and all That you know everybody's got to make Money uh to you know provide services And stuff but our ma our ability to Change a pool Takes about 35 seconds Across the entire 1200 Asics it's that Quick we literally have it scripted yeah I can put in pool number the next pool Apply to all Asics and write down the List it goes yep and it's done Um so that you know I think is Um Yeah it's very powerful and you know That that's where I think it kind of if People are providing good services and And they're they're enhancing uh your Ability to uh generate a little more I Get that I mean and I think that's Ordinals is an interesting development In Bitcoin it's probably one of the most Interesting developments in Bitcoin in a Long long time Um and it shows the inguity of people Coming and thinking of like how else to Use something like something may have a Certain pretend yeah a tent Taproot for Sure had an intent

But it also now gave this whole new Thing right that manifested from it Um and I like I like development I like Seeing things move forward right uh so I'm interested in what could be I I do Understand the arguments on the risk of The chain getting really bloated I do Understand the risk of all these other Uh information things that could get in There that then people are like oh you Can't erase it and what if you have all This bad information in there uh are you Know like illegal information uh like With you know if you're talking like Some kind of like child porn or Something terrible that shouldn't be There like how do you handle those kind Of situations and you know I always look At it like you know the regulatory Fronts and all that you got to Understand how that stuff works and and And understand that there is There is some gatekeeping that's just Kind of like ethical like of like you You gotta mint the block like the pool Ultimately is creating that that post Right so Um There's it's like a natural filter kind Of thing it's like well I'm not trying To censor stuff but come on man like That's not I think the world can agree That's pretty that's pretty trash and so There's a decorum I think that people

Naturally will fall into that but like Uh you know those kind of things is I Think the way you answer that kind of Stuff but like you know it it all comes Back down if a pool lets that through And you have somebody out there maybe Somebody wins a block with enough hash Rate or they've rented it from nice hash Or something and they want to block and They want to be an idiot and put Something in there I think he kind of Flagged those as like you know well Somebody did it you know like you can Not have it on the explore review or Whatever else but like you know the Society needs to come around on those Kind of things but let the Innovation Happen thanks for checking out this clip From the crypto mining show you can Check out the full episode here or more Crypto content down here also I'd like You to check out my locals page at son Of a where you can Become a member for free or choose to be A five dollar a month supporter that Unlocks additional content

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