Oil Fields Are Printing Bitcoin | Steve Barbour

And are these folks generally just fine with Bitcoin mining? Do they have any background on it? Do they even care? Or is it mostly just the economics that are so compelling that even if they don't necessarily know what Bitcoin is or are skeptical about it, it makes too much sense for them not to deal?

I mean, the typical Bitcoin mining... starting with Bitcoin mining economics, I mean, Bitcoin mining economics are rough.

Uh, they've always been rough.

Uh, there's never really been a point where Bitcoin mining has been, uh, loosely speaking, super profitable.

The, because even in the early days, I mean, early, early days, like where, uh, industrial mining started, uh, Started for real like in 2013-ish timeframe when like ASICs became the main, you know, the technology went to ASICs with like early, you know, Canaan and other vendors.

And then of course, Bitmain starting to dominate.

I mean, like whenever mining is super profitable because hash prices spike with Bitcoin price, the Bitcoin price spikes, the compute price spikes.

And you get this like gross profit margins really high so i mean if anyone interested like uh you know look at historical hash price so like you go to a place like hash rate index who uh shows historicals on that uh when you see these spikes in hash price so the gross profit margins on bitcoin mining are really really attractive like you know you're making high like converted to say us dollars like high dollars per kilowatt hour uh whenever it's super profitable, the computer prices also spike.

So right now the hash price, it's in a decent spot.

It's in that like somewhere around $40 per pay to hash per day range.

But it's sort of at an all time, it's generally been averaging at all time lows.

And that's sort of the nature of Bitcoin mining.

Like hash price will always tend to trend down and that's because the computer chip efficiencies trend up over time like the chips itself get better and better over time so Bitcoin itself like Bitcoin mining itself has always been very difficult to make money on as a pure play and that's why like you know big mining pubcos you know you can just look at them because they're public you can see their financials historically And when you look through their historical financials, certainly when they're pure play Bitcoin miners, they haven't shown outstanding results.

And the biggest cost of mining that has mostly been overlooked in years past, it's more on the forefront of an investor's mind these days, is the computer depreciation.

You know, like you can make these really great gross profit margins when there's a bull market in Bitcoin mining.

I'd say right now, like we're still sort of in a bearish market in Bitcoin mining, but it's getting better, especially with Bitcoin price starting to go up again.

But, you know, you're chasing like you're sort of like the ASIC hamster wheel.

You're buying computers.

they're basically hyper depreciating like, like any electronic they're, they're just depreciating exponentially.

And, um, you know, so that cost of hardware depreciating, which is, you know, a non-cash expense, you know, you have to replace those computers like over time and if they fail, you know, that's also been a problem in the industry is the quality from vendors, like the reliability of the hardware.

historically has been incredibly poor.

So, you know, you go and buy these mining machines, you power them.

It doesn't matter if you're an oil field or on the grid, um, they are depreciating all the time very rapidly and you need to keep them online to try to get that, uh, get that return on investment.

I guess the difference for us, like, you know, we've, my thesis has always been that, um, like I have always seen Bitcoin mining, like, like in some form of edge computing.

Uh, I've never really been a fan or I've never really believed that these large scale Bitcoin mining on the grid had a healthy future.