We are looking at exactly how much bitcoin a large mining company actually bags. what with the recent red candlestick market crash drama (opens in new tab), it is clear that bitcoin is not as profitable today as it once was. But has it really made a difference for large mining operations?
It turns out that even with stacks and stacks of ASICs and GPUs all powered up and pumping with abundant use of hydroelectric and nuclear energy, major mining initiatives such as Hut 8 Mining Corp (opens in new tab), appear to be taking losses. And yet they continue to grow.
Hut 8 is “one of North America’s largest innovation-focused digital asset mining pioneers”. This recently proclaimed (opens in new tab) which is holding (HODLing?) 7,078 self-extracting bitcoins in reserve – that’s about $210 million worth of cryptocurrencies in today’s market.
While this may seem like a win for Hut 8, let’s turn back the clocks to see how much of a failure this year has been for the company. As the Hut 8 sees an average production rate of around 10 bitcoins per day, that would mean it had around 5,578 bitcoins at the start of 2022. In January, a bitcoin was worth $47,733, but since then, a single bitcoin has dropped to $47,733. one worth just $29,509.
Seeing how the company too spent $30 million on Nvidia CMP GPUs (opens in new tab)And even if you don’t take into account the energy costs associated with running a company like this, all this points to huge theoretical losses due to the sharp fluctuation in the cryptocurrency market.
Sparing you the (totally in-depth and mega-smart) calculations, despite the company’s 1,500 increase in bitcoin, which actually works out to a comparative loss of around $57 million. And yet, the company continues to expand.
Hut 8 has just revealed that testing has been completed in North Bay, Ontario, and will be expanding its operations there. Currently, there are sites located in Drumheller and Medicine Hat, Alberta that use “an abundance of renewable energy”.
Hut 8 says it was also able to save money by limiting energy consumption at Drumheller “when the spot energy price soared”. Exactly how the surge in energy prices and the cryptocurrency crash affected him remains to be seen.
After all, you are still making money both real and figuratively.