Blockchain
A Q&A on Bitcoin mining in North America with Whit Gibbs
By: Kevin Kelly | January 6, 2022
The following is excerpted from an interview with Whit Gibbs, the Founder & CEO of Compass Mining. Compass recently authored the North American Mining Index. In this interview, Gibbs provides unique insights into the topical issues facing the US mining industry including the effects of the mass exodus of Chinese miners in mid-2021 as well as an industry-wide shift to sustainable mining solutions. The interviewer is FCAT’s Kevin Kelly, business analyst of Bitcoin mining.
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Kevin: What would your advice be for someone reading this and trying to get into Bitcoin mining in the US? Why mine at all given the advantage of economies of scale for institutional players?

Whit: Scale doesn’t determine your profitability, it just affects how much total bitcoin you mine. But in current market conditions, you can mine profitability with one machine or 1,000 machines.

Kevin: In your opinion, what are the main drivers of the US’s hashrate growth in 2021, and what role are smaller retail miners playing, if any?

Whit: This year has seen record interest from retail or small-scale miners. The influx of hashrate in North America comes from big players finishing large projects started several years ago, miners from China moving to the US, and a revival in general interest in mining.

Kevin: As China continues to clamp down on mining activity domestically, how would you describe the impact on US colocation facilities?

Whit: Lots of miners are still looking for hosting space for their machines. That will be a key shortage in the market until at least spring 2022. But miners are aware rack space is in short supply, and almost everyone is trying to build more. But those projects take time to complete.

Kevin: While institutions are pushing towards greater sustainable energy use, how important is using cleaner mining solutions for smaller miners?

Whit: Miners care about cheap energy before anything else. And there are so many sustainable power options that are very cheap. Sustainable also doesn’t just mean wind or solar. It means nuclear, it means off-grid natural gas, and other things.

Kevin: What are the advantages of nuclear micro-reactors, and what are you hoping to accomplish from the initiative with Oklo?

Whit: Miners act as buyers of last resort for power producers, which gives them security in expanding their infrastructure. Even if there isn’t immediate demand for all their power, miners pick up the slack and support bigger, stronger energy grids. We’re playing this role with Oklo’s micro reactors by agreeing to buy a portion of their power before the reactors even launch.

Kevin: Could you please describe the risks that stem from the centralization of hardware manufacturers? What is the current state of the hardware market and challenges faced by miners?

Whit: Almost all Bitcoin ASIC manufacturing is centralized in Asia. Just with hashrate, having all or most of any part of the industry in one geographical location presents regulatory risks from a single point of failure. Chip manufacturers already have plans for building in North America, and Bitcoin ASIC manufacturing will of course follow suit.

Kevin: To wrap up, what are your thoughts on the trajectory of hashrate in the coming years as well as key pressures that may inhibit growth?

Whit: The limitations are always changing. Sometimes it’s limited access to new machines, sometimes it’s a shortage of places to host those machines, other times it’s new regulations that limit or ban operations altogether. Miners have always adapted and always will. We’re ready for whatever comes next.

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