The intensifying geopolitical conflicts have led to a surge in global energy prices, and the world is struggling in a new energy crisis. The price of international crude oil futures rose by over $130 per barrel, and the gasoline price in the US soared to over $4 per gallon, the highest record since 2008.
Affected by such factors, European countries that rely heavily on energy imports start to feel the pinch of the new energy crisis. Since early April, some European nations have been hit by cold air intrusions for an extended period, and a few regions have suffered the lowest temperature in a century. However, due to the surging demand for natural gas, as well as the skyrocketing gas price, many residents cannot afford the expensive gas fees. As such, in these regions, woodfire has become a “normal” way to deal with extreme weather conditions.
Energy transition is imminent
Although fossil energy still dominates the present energy system, the new crisis has encouraged countries to review the development of renewable energy. Recently, the European Commission launched a strategic plan on energy. More specifically, the plan involves targets such as promoting energy diversification in EU countries, accelerating the adoption of clean energy technologies, etc.
At the moment, providers of sustainable energy include well-established public companies such as NextEra Energy, Orsted, and Iberdrola, as well as rising stars like SAI.TECH and Crusoe Energy.
In particular, SAI.TECH is a clean energy driven Bitcoin mining operator that offers hosting services with the world’s leading energy-saving solutions to computing, power and heating industries. Relying on an integrated solution of “liquid cooling + waste heat utilization”, SAI.TECH collects the waste heat generated by mining machines during the computing process for secondary use，such as providing heating services for greenhouses, residential and commercial buildings or even district heating. This approach replaces the traditional heat source with clean energy while slashing the cost of electricity.
Maintain miners’ profit margin
According to data from CCAF, as of April 21, 2022, the annual power consumption of global bitcoin mining is about 137.36TWh (1TWh=10^9 kWh), which exceeds that of Sweden.
Tesla’s CEO Elon Musk previously tweeted: “I still believe in cryptocurrency, but it cannot rationalize the massive use of fossil fuels, especially coal.” Driven by the current advocacy for “carbon neutrality” and the impact of international turmoil, renewable energy is apparently more attractive in a world where the price of fossil energy has soared.
The BTC price has fallen by 42% from its peak in November 2021. Meanwhile, multiple intensifying factors have pushed up the price of fossil energy like oil and natural gas. In light of such circumstances, the profit margin of BTC mining has dropped from 90% to around 70%. At the same time, the UK-based research firm Wood Mackenzie suggested in its latest report that renewable energy is 12% to 29% cheaper than the lowest-cost fossil fuel. For miners, the use of renewable energy makes great economic sense —maintaining the profit margin.
Big mining companies ready to take actions
At the just-concluded Bitcoin 2022, over 450 speakers dived into topics such as the core development process of Bitcoin, the difference between traditional finance and Bitcoin, etc. Many of them focused on BTC mining, and energy was also one of their concerns.
Adam Back, the co-founder of Blockstream, said during the conference that Blockstream and Block (formerly Square) are breaking ground on a solar-and battery-powered BTC mining farm in Texas using solar and storage technology from Tesla.
The “unique nature of the miners’ energy consumption profile” is so good for soaking up curtailed energy that it is hard for other industries to compete, said SAI Tech’s CEO Arthur Lee, whose company focuses on the deployment of mining farms which simultaneously provide heating to large installations such as greenhouses and shopping malls through their patented “liquid cooling and waste heat utilization technology”.
This is because clean energy stations are primarily built at remote areas, which benefits energy consumers with high mobility and a huge demand for energy. As crypto miners fit this profile perfectly, there is an inherent competitive advantage for them as clean energy consumers.
It has been reported that the SEC has declared effective TradeUP Global Corporation (Nasdaq:TUGC, TUGCW, TUGCU), a publicly traded special purpose acquisition company (SPAC company), and SAITECH Limited (“SAI.TECH”)’s registration statement relating to their previously announced proposed business combination that will lead to SAI.TECH become a public trading company on the Nasdaq stock market under “SAI”. SAI.TECH is a major partner of ViaBTC Pool (a world-leading comprehensive mining pool). The Extraordinary General Meeting to approve the business combination between TradeUP Global Corporation and SAI.TECH will be held on April 22, 2022 (EST). This represents a major milestone for crypto mining industry because it indicates that capitalists, institutional investors, and the industry itself will focus on identifying new opportunities i.e. energy efficient and ESG solutions in this field. In fact, the entire crypto mining industry is in transition towards scaled, specialized, and globalized growth.
For example, ViaBTC Pool is an all-inclusive crypto mining pool serving a global user base. It provides services that enable the mining of dozens of cryptos, including BTC, ET, LTC, etc. Moreover, ViaBTC Pool also features leading hashrates for mining mainstream cryptos like BTC and LTC. If the energy sector could strike a new balance between sustainability and cost, there will continue to be more mining-related institutions like ViaBTC and SAI.TECH.
The current rise in energy prices has led to an imminent “reshuffle” of the BTC mining industry, and mining companies using traditional energy sources might go out of business due to declining profits. Based on actions taken by the leading BTC mining companies such as Core Scientific and Marathon Digital Holdings, the adoption of renewable energy like solar power and wind will gradually become the mainstream trend in the field of crypto mining. However, generally speaking, the market cap of companies engaged in the clean energy business remains low compared with that of traditional energy companies, and clean energy boasts a vast potential market.