Talk to Luxor Mining Pool about Mining Hotspots: Intel Chip Ethereum Merges with US Mining Regulation

1 Will Intel chips challenge the traditional pattern?

COLIN: Having another major ASIC manufacturer compete for market share in the hardware space will definitely benefit miners. For North American miners, the emergence of domestic ASIC miners is a very positive development.

ETHAN: The introduction of Intel could also change the miner form factor, building new chips for more traditional data centers. In the public filing, GRIID stated that it purchased 25% of Intel’s initial allocation for miners, so it looks like the first batch will be roughly TKTK miners. Intel is likely to ship all of these products this year, although supply chain congestion and other actions may delay some shipments.

The price is credible because it comes from GRIID’s public filing. As for lower prices, we’ve already seen this with the Antminer S19 XP (first preorder $75/day). It is common for new miners to have lower initial order prices. Once these miners hit the resale market (unless ASIC prices drop significantly), they could sell for more than the company paid for them.

Bitmain is definitely still the dominant player at the moment. We estimate that Bitmain machines account for 70% of the market. In addition to Intel, Blockstream and Block (formerly Square) deserve attention. ePIC Blockchain has also been developing Bitcoin ASICs. I would say, if anything, these four companies are positioned to produce competitive machines.

2 Will the transfer of Ethereum POW to POS go smoothly? Can other cryptocurrencies such as ETC replace the computing power of graphics cards?

COLIN: We don’t think POW Ethereum is going away anytime soon. However, if Ethereum adopts POS (which frankly looks less and less feasible with every update from developers), then other altcoins will absorb Ethereum’s hash rate.

ETHAN: The amount of revenue on these chains will not change overnight, but the value of each GH hashrate will drop significantly.

3 Are rising energy prices now causing electricity prices to rise in the US

COLIN: Yes, 2021 is the fastest year for U.S. electricity prices since 2008. Prices may continue to rise throughout 2022, depending on the situation in Ukraine and the recovery of global supply chains as we emerge from COVID. In the long run, we think this will have a positive impact on America’s energy infrastructure, as it will lead to more energy projects being funded.

4 Is listing a mining company still a good option?

ETHAN: Open markets allow miners to tap into new pools of funds unavailable to private companies. It also provides shareholders with a more efficient exit mechanism to obtain liquidity for their holdings. While the market has cooled since 2021, we do believe there will be a number of new listings this year, including previously announced companies like Prime Block and Griid.

5 Will the mining industry become a problem similar to China’s over-centralization of the US?

COLIN: Personally, I don’t think the concentration of hash power in the U.S. poses any risk. The US has a federal state structure and is one of the better places to mine from a legal standpoint (e.g. a blanket ban on mining in the US is almost impossible given the US court system and states). Additionally, one of the problems with mining centralization in China stems from the fact that basically every aspect of mining (miners, pools, and ASIC supply) is centralized in China—after the ban, every sector of mining is become more dispersed geographically.

One final note: miners operate for their own benefit and are strongly opposed to attacking the network. I think miners can be concentrated in one place and they themselves don’t pose a threat to the network (they do pose a threat to the network, but based on my point above, I think it’s much less likely to happen in the US than in other countries many).

6 Will US regulation be a burden for POW mining in the future?

COLIN: It really depends on how strict the lawmakers and regulators are. So far, there has been no burden on miners, but of course this may change. For example, Congress tried to push a provision in its most recent infrastructure bill to classify miners as brokers for tax purposes. We also saw some senators introduce a bill that would allow miners to sanction transactions from Russian individuals under sanctions laws.

Regulation can be a hurdle, but there hasn’t been any regulation to the detriment of miners recently. Additionally, U.S. state laws protect miners from the federal government to a much greater extent than most other countries.

7 In addition to the United States, which countries in the world will be more potential regions?

COLIN: We are very bullish on Bitcoin mining in Canada and South America, especially Venezuela, Paraguay, Argentina and Colombia. Russia is also popular, while Iran and Kazakhstan have fallen out of favor due to grid and political instability.

ETHAN: We think countries like Norway have a bright future in mining, but must stay away from any potential EU regulation of other European countries.

8 Any advice for Chinese miners who want to go to North America?

ETHAN: When evaluating the move to North America, we recommend that Chinese miners take the time to survey their peers. Often, the best deals on paper tend to execute poorly. So the point here is that cheap isn’t always better, and cutting costs up front can lead to lower profits in the long run. Luxor is always happy to explore new business opportunities with the Chinese.

9 Do you predict the impact of multiple rounds of Fed rate hikes this year on Bitcoin and the mining industry?

ETHAN: We don’t think a big rate hike is likely, there could be a series of rate hikes, but within 75 basis points (0.75%). Overall, as interest rates rise, we think that, all other things being equal, this will be detrimental to the price of Bitcoin, but there are other factors at play here, such as positioning Bitcoin as the world’s reserve currency. Miners that optimize operating costs and execute well are able to withstand short-term fluctuations.

10. Many bitcoin mining companies are now bitcoin holders. Is this behavior sustainable?

COLIN: Basically all the big miners (1 EH/+) do it at this point. As for whether it is sustainable, they can cover their operating expenses by selling equity (which often upsets shareholders as it dilutes the value of the stock) or through financing (loans). A balance needs to be struck, and if interest rates rise high enough, miners will have fewer attractive financing options. They can always accept bitcoin-backed loans, but this also becomes less attractive in a higher interest rate environment. Many miners will hold for as long as possible, but depending on market conditions, some will inevitably have to sell.

Posted by:CoinYuppie,Reprinted with attribution to:
Coinyuppie is an open information publishing platform, all information provided is not related to the views and positions of coinyuppie, and does not constitute any investment and financial advice. Users are expected to carefully screen and prevent risks.

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