Bitcoin’s ‘Fundamental Value Is Not in Line With Market Price’ — Crypto Miner – Interview Bitcoin News

A team of highly-skilled professionals can keep the runtime running, which is what makes profitable bitcoin mining possible. This was stated by a founder and CEO of Bitcoin mining company. These attributes allow a bitcoin miner to still make a profit even if the price hovers around $20,000

‘Bitcoin Fundamentals Rarely Change’

One of the reasons for the insolvency and collapse of large cryptocurrency entities such as 3AC, Voyager and other recently established ones is the drop in bitcoin’s value from under $30,000 at June’s start to $20,000 by the middle of June. These high-profile entities aren’t the only ones who were seriously affected.

Many market participants including miners of bitcoin have also had to manage lower prices and the increased likelihood that they will become insolvent. Many market participants are, or were already, excessively leveraged, as 3AC’s situation has demonstrated. A further significant fall in the prices may lead to more insolvencies.

However, for other market participants like BTC miner Permian Chain, a further drop in the price of the top crypto is unlikely to have much impact on the company’s long-term plans. Mohamed El-Masri is the CEO and founder of Canada-based cryptocurrency mining company. He said that the core value behind Bitcoin drives them. El-Masri sent an email explaining to Bitcoin.com News, via email, that Permian Chain’s short-term volatility and accompanying media headlines cannot make it change its course.

Below are the rest of the Permian Chain CEO’s responses to questions sent to him by Bitcoin.com News via email.

Bitcoin.com News (BCN). The continued downward trend in crypto asset prices already has led to some of the biggest players in this sector going under. Bitcoin miners, too, are feeling the heat. Can you tell our readers what a Bitcoin price below $20,000 means for miners?

Mohamed El-Masri (MM):Global macroeconomic factors are widely blamed for the over-leveraged position that many of the largest bitcoin miners now find themselves in. They drove global energy prices skyrocketing, putting downward pressure on crypto markets and equity stocks. A large part of the major crypto market sell-off was caused by the vulnerability and, to some extent, negligence of high-leveraged participants in the markets that had to liquidate their digital assets and bitcoins to pay debt.

The outstanding returns bitcoin miners enjoy above $45,000 will not be available to a bitcoin price below $20,000 Industrial bitcoin miners use new, highly-efficient ASIC equipment. They can remain profitable if they keep power costs below $0.05/kWh or $0.10/kWh. Smaller miners that don’t have economies of scale and low-cost energy sources are mining below their break-even point for sure. But, profitable bitcoin mining comes down to an experienced and skilled group of professionals who can keep the runtime up, even when there is $20,000 in bitcoin prices.

We shouldn’t forget one of bitcoin’s key features, its Difficulty Adjustment Algorithm, which rewards miners that stay online during low market cycles as other miners turn off their equipment due to lack of profitability, defaults, insolvency or whatever… The key to gaining and benefiting from the upside is to stay online with the most hashrate possible for as long as possible.

BCN: What has been the impact of the depressed crypto prices on Permian Chain’s operations?

MM:Permian Chain is going to continue mining bitcoin regardless of changes in market prices. While headlines may be subject to market fluctuations, fundamentals are stable. What is the fundamental value of bitcoin?

We have streamlined our relationship with our energy providers by using our energy-as a service and Bitcoin mining platform. This has allowed us to improve our efficiency. For example, Permian Chain works closely with our energy producer and site manager in Alberta, Brox Equity, to streamline a vertically-integrated value chain; from onsite fieldwork to online software solutions, we are able to keep mining and maintain operations.

BCN: Will it be financially viable for Permian Chain, even if prices fall further?

MM:All it comes down to what you consider profitable. It is unlikely that profitability can be assessed using a dollar amount. If we consider profitability as a bitcoin price, however, it is possible to say yes. In my personal opinion, the fundamental value is not in line with bitcoin’s market price. The fundamentals of bitcoin take time before they become apparent to everyone.

Bitcoin mining can be a great value-creator if you plan to invest in bitcoin over the next ten years. Also, keep in mind that it’s very possible that many bitcoin miners worldwide will shut down if bitcoin prices continue to fall. The difficulty adjustment will be affected if enough miners close down. Mining becomes easier when the difficulty rate is lower. As a result, this increases a miner’s chances of earning bitcoin more often than when the difficulty rate is high.

ASIC mining machines must work hard to verify the transactions they make on blockchain. Blocks of transactions are solved in return for bitcoins. Lower difficulty rates allow miners to solve blocks more quickly, thus resulting in more bitcoins and a lower energy cost.

BCN: Permian Chain uses low-cost energy derived from stranded or flared resources in its data-mining facilities. Can you please explain the reason Permian Chain chooses to use this source of energy?

MM: Permian Chain offers an energy-as a-service platform to compute infrastructure. Its first offering is bitcoin mining. We aggregate all sources of energy onto the platform to help the world’s energy producers monetize and capitalize on their wasted and stranded resources through our tokenization processes and Smart Off-Take Agreement (SOTA). Our goal is to take bitcoin mining off the grid. We started with natural gas because it’s where ESG issues are greatest. This makes our use case very clear.

BCN: Where is bitcoin mining profitable using flared and unstranded energy resources in the United States?

MM: It depends on several factors as each jurisdiction has its different standards from regulations, costs of labour, cost of raw material, overheads, etc… All of which affect your net power cost. I hear a lot of talk around low-cost power in certain areas, but I can easily assume that most of these so-called “opportunities” do not factor in other costs that I mentioned. All costs must be included in order to get a complete picture of your operating expenses. To sum it all, anywhere from $0.05 to $0.10/kWh is low-cost. This shows efficient cost management. This is especially true when you consider that we live off-grid.

BCN: Some environmental groups believe that bitcoin’s code will be changed to reduce its negative environmental effects. This argument is supported by many environmental groups.

MM:What can you do to improve your coding skills? What to change? I don’t believe Bitcoin should or would change… it’ll only continue to grow in adoption rate and improve its efficiency through Layer 2 technologies and improved new generation equipment. Companies such as Intel and Samsung continue to manufacture new generation chips that’ll improve mining efficiency.

As for the environmental impact, just as the internet runs on data centre facilities consuming 2% of the world’s on-grid power, Bitcoin will continue to require mining “data centre” facilities. However, Bitcoin is the largest computer in the world and only consumes approximately 0.4% of the world’s electricity. A majority of this energy comes from clean and renewable sources. Bitcoin mining tends to be more dependent on off-grid sources of energy such as solar and clean hydro.

BCN: Could you please briefly describe how the tokenization platform operates?

MM:Register energy companies and register your resources on our platform. Before approval, we review all submissions. After approval, resource projects may be tokenized in two ways. First, a security token offer is made to registered investors through broker-dealers. Second, Smart Off-Take Agreements are issued to our network of miners to allow them to stake their stablecoins on projects they want to place their ASIC miners. Energy companies can receive support early from miners to help them commercialize their resources.

BCN: Both Africa and the MENA region — where solar energy is seemingly plentiful — still account for an insignificant portion of bitcoin mining. Are there any reasons this could happen? If so, what can be done to make these areas more attractive to miners?

MM:Innovation and the development of new business models is easier in countries like North America, where most energy resources are private. In the MENA region, energy resources are nationalized. Governments and regulators take longer to encourage innovation at the same pace as open markets. I think we will see a lot more foreign investment and bitcoin miners once the MENA government announces their regulations. PermianChain allows regulators to have a better understanding of the projects and permits for low-cost reconciliation. It also facilitates enhanced transparency.

Let us know your opinions on the interview. Comment below and let us know how you feel about this interview.

Terence Zimwara

Terence Zimwara was a Zimbabwe award-winning journalist and writer. His writings have covered the economic problems of several African countries and how digital currency can offer an escape route.