In a new segment of “Down the Rabbit Hole”, Andreas Antonopoulos, a Bitcoin evangelist and influencer with more than 510K Twitter followers, says US-based Bitcoin miners may soon become more competitive and profitable.
Antonopolous covers the collapse in demand of oil and the increase in supply due to the cartel conflict in oil producing nations. With increasing supply and decreasing demand, full oil tankers have been sitting off the coast of major refineries in the US, Middle East and Asia, stagnating and storing oil – with no demand. Antonopolous says that the surplus has driven oil prices below a dollar a gallon for refined gasoline at the gas pump.
Coal power plants, on the other hand, determine China’s cost of electricity. Therefore, the price of electricity due to the decrease in oil prices has suppressed electricity costs worldwide but not at an equal magnitude. For example, the cost of electricity in the US has decreased at a faster rate than the cost of electricity in China.
Antonopoulous points out that this phenomenon may create a competitive edge for Bitcoin mining in the US as American mining rigs become more profitable with declining costs.
“One of the biggest new mining operations opened in the United States in the state of Texas, and I can’t imagine that that is a coincidence. It opened long before this crisis and change in the oil price, but I can’t imagine that it was in order to get the beautiful weather of Texas or because of Tex-Mex cuisine. It probably had a lot to do with the fact that the US at 12,000 barrels per day is the largest oil producer in the world because of fracking. Therefore, there may be really good opportunities for cheap power which would suddenly make US-based miners much, much more competitive and profitable.”
In fact, Antonopoulos says most regions, outside of coal-driven economies such as China, will benefit from the decrease in the unit cost of electricity caused by the decrease in oil prices.
Antonopoulos also says access to the most recent ASIC miners drove mining competitiveness previously. However, in 2016 the limitations of Moore’s law led ASIC development to slow with improvements of efficiency occurring only every 18 months.
Because most ASIC equipment now maintains competitiveness one to two years after the manufacture date, access to cheap electricity serves as the main driver of competition among miners.