Topic: [2020-08-27] DCG is betting $100 million on mining Bitcoin in North America (Read 328 times)

print some more cash, and lend gift it to mining startups at negative rates? certainly possible in Europe, and apparently becoming more politically feasible in the US. Go-go-GDP!

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Overall, I think the gradual embrace of Bitcoin mining by electricity producers is in one way an unfortunate inevitability (as several people have argued already), but in another an important step on the road to Bitcoin's integration into the most fundamental layer of the world economy.

• the current world reserve currency is contract-linked to energy (this contract is, however, increasingly unobserved by big energy exporters)
• Bitcoin is the energy based currency

Being directly energy based was the innovation that set Bitcoin apart from the other attempts to create a permission-less & trustless currency. If energy producers begin to use Bitcoin mining as part of their business model, then one of the absolute root sources of economic production is a BTC stakeholder. To some extent, the energy industry becomes a rival to the central banking institutions. Where previously the banking & energy sectors were in a symbiotic relationship, this change now represents what I think is described as "vertical integration" of the manufacture of energy production with that of transaction tokens, where no possible such integration existed before.

Because energy producers are right at the base layer of the economic system (alongside food production), one of the basic premises for Bitcoin to become systemically influential is moving into place.

I would add to this that huge innovations in the diversification and distribution of energy resources are likely to take place in the medium term. Some will remain in permanent pipe-dream territory, but some will certainly become commercially and economically feasible. Even the past 10-15 years has seen significant changes in where energy come from and who owns the infrastructure to produce it. So, who is mining Bitcoin using their production facilities is set to change in a similar way.

This is pretty amazing. I'm wondering what sources of energy they plan to use for the mining, because I always thought it wasn't cost effective in the United States. I saw the plans from BitMain to go to Texas and that state might be best due to 0 state income tax and lower energy cost, and natural gas resources.

That's what I mean. Of course taxpayers don't have to help miners to make money. But taxpayers can help future themselves to get more job opportunities, with, probably, some good pay.  It's a fact that we are living in a world where many old jobs are vanishing, so many new jobs must be created in the same pace, at least.

it's an interesting question, actually.

consider states like australia, whose economy is based heavily on mineral and fossil fuel extraction. both federal and state governments subsidize miners extremely heavily---their effective tax rate is a fraction of all other sectors.

if bitcoin mining were to become significant in terms of GDP and the labor market, i reckon they would become increasingly subsidized for the same reasons. local governments, particularly in economically blighted regions, have even more incentive to subsidize miners for the sake of local job creation.

No, no, I didn't mean "we're in trouble". They are in trouble, or rather their countries in general, if they don't support promising technologies in time. The technologies will survive by themselves, only they will yield benefits to the countries which support them the most. That's what I meant, basically.

I would be very skeptical if the American government begun paying tax payer's money to pay for the security of bitcoin hehehe. It might be some billionaire hodlers using their influence to save their investment or the government itself having interest on bitcoin as it becomes a banker's coin.

Here we go again, every day we clap how good decentralization is, how resilient Bitcoin is, and how the evil gubbermint can't stop it, and then, the same government should subsidize mining or we're in trouble. How the hell is this any different from the government bailing out banks? If the network can't stand for itself it means we have a serious problem, and patching it with cash will only solve the problem temporarily, and when there is no more cash left to do it, then what?
How are you going to explain to a guy that pays 20c/kWh that his bill will double in order to protect Silbert's billions?

If there would be a real war which obviously is not the case, is it that hard to see how it will end?
No country will want to deal with something that can be attacked by a foreign nation and spend billions to defend it when they could simply go centralized, that's the harsh reality, no central authority will step in to save it for the sake of just a few investors, they will all wash their hand and let it be taken over.

Firstly, why would anyone want Trump or any of his fuckwit cronies anywhere near Bitcoin?  He's an erratic, narcissistic, reactionary simpleton.  The worst kind of toxin.  The further away from Bitcoin he stays, the better.  I would warn strongly against supporting state-sponsored mining of ANY kind, but particularly his joke of a government, which appears to be a special kind of balance between stupid and corrupt.  Introducing petty national interests to a global system is utterly shortsighted.  Consider carefully what it is you're proposing here.

Secondly, don't paint it as a "war".  Wars have winners and losers.  However, with this system, if one entity "wins", we all lose.  Bitcoin at its core is neutral.  It is not a weapon for political influence or intrigue.  And that's what it could potentially become if nation states start vying for control.  And the US in its present guise definitely sees itself as "world police".  They want to control everything.  Antithetical to the entire concept of crypto.

Lastly, for the topic in general, people still seem to treat China as though their people and their government are one and the same.  I suspect that most of the people who are mining and are based in China probably have some pretty strong opposing views to their government.  In fact, I'm pretty sure advocating state-sponsored mining would be a less popular idea in China than it would be in the US.  So if increased mining in the US means more state influence, I'd honestly prefer China remain on top.  Arguably, Trump supporters are even more blindly fanatic than supporters of Xi Jinping.  They'd do anything the bloated orange windbag tells them to, regardless of how much self-harm it inflicts.  I don't trust that level of indoctrination.  It's honestly scary how much faith those in the US can often have in their farcical buffoon of a leader.

Think of miners as individuals with minds of their own.  Because, for the most part, that's what they are.  They aren't government puppets.  But the potential for government puppets increases dramatically in my view with a pro-Bitcoin Trump and his fervent, mindless followers.  

Hell no. Let it live and die on its own virtues. No taxpayer is going to be delighted at paying some miner to make money. If they can't cut it then it's their problem and they have to make way for someone who can and that's how it should be.

Trump, or rather his advisors(because I bet Trump himself doesn't know a damn thing about Bitcoin mining), should change their attitude as soon as possible, if they want to be the winners in the war. BTC mining should be subsided by government because only a few private entrepreneurs can tolerate the occasional price dumps. Like any relatively new forward-looking business, it should be supported by government to thrive.

You might be complicating it hehe. I speculate that Barry Silbert made a deal with an energy company to sell him electricity at lower whole sale prices that would have his mining company make a profit. It might only be a straightforward profitable business deal.

By how the article is constructed it looks like the Foundry is focus on creating mining farms in either states where they have cheap electricity or states where they will have any renewable energy source, this just answer what there plans will be in North America in order to succeed since the article is right to point out that North America isn't really the preferred place to be when it comes to crypto mining due to electricity cost being the main factor. If they somehow overcome this cost and actually profit from the trades they will have from the crypto they will mine I think that this mining firm will be able to succeed expanding their operations in NA.

They probably have, but it seems to be the guys crunching the numbers don't nearly always use the same data and understanding of actual miners in the business for years. I've seen the white papers and the financial projections of several mining projects already and they seem to ignore a lot of variables like ... Bitcoin (extreme) volatility.

Bitmain has had a lot of partnerships that have gone up in smoke, plans for Canada and Iceland also, I think that they are putting way to much pressure on their partners and most probably want to take all the cake not just the bigger slice.

The only thing that troubles me in this article, which otherwise would be pretty good new is this:


If you don't have energy as cheap as in China, and you're still relying on Bitmain for the equipment, there is little room for mistakes in this, probably they will have to go with a zero profit /hash to keep the network security policy.

But, they might get some help from a really surprising party:
Bitmain, Ebang Among 21 Bitcoin Mining Farms Stripped of Energy Perks in Inner Mongolia
Oh, as always, news from China, take it with the usual grain of salt

We read a fair bit about mining launches in North America. I haven't come across many updates, or much confirmation that they actually got rolling, after the initial announcement has been made. I guess it's in miner interests not to reveal where they set up if they manage to get a scoop on power or premises. It might be more diverse than we think. Dunno.



Perhaps we need that China shock to demonstrate how ready mining is to abandon it and how ready mining elsewhere is to take up the slack. I saw a Mr Ripple drooling on about 'China' reversing Bitcoin transactions. Puh-leeze.

Every time people fretted, or FUDded, about Bitcoin's dependence on something like Silk Road or the piece of shit zero fee Chinese casinos, when they died Bitcoin shrugged it off and became ever stronger.

This is a very sensitive topic in the crypto community, because although some say that the data on mining power as far as the Chinese are concerned is overemphasized (false), others are of the opinion that there is too much power as far as Bitcoin is concerned in China. Personally, I don't like that part of the crypto economy, because the Communist Party can ban mining at any time, literally overnight - and relocation is not something that can be done in the short term.

Decentralization of that power is certainly desirable for Bitcoin, this would definitely give it more credibility in the eyes of investors who, to put it simply, do not want to invest too much in something that is in some way controlled by China.

i'm not surprised. hashpower has been quietly moving from china to north america for the last couple years, and mining industry insiders have been speculating this would continue post-halving---especially if prices remain high, as they have. https://decrypt.co/27777/bitcoin-halving-could-bring-way-more-mining-back-to-north-america


relocating mining power away from china is good for DGC's and frankly all of our interests. still, i view those comments (particularly about creating american jobs) as more of an effort to market the venture, especially to local officials who can offer them tax incentives and grease the permitting/licensing process. profit is still the driving motivation, no doubt.

Competition is great and welcome in such an open thing like Bitcoin

I agree with that concept but it has a large 'you first' element.

I'm sure every one supports less china as long as they don't have to subsidise it.

It is interesting that an article on this topic was published in February this year, and the author of the current article obviously used it as a source because some sentences are very similar.

Example :



No matter how the article is intoned, there is no doubt that someone will invest $ 100 million and will not expect a profit - for that reason maybe the whole thing should be viewed from another angle. From the second article (or rather the first), Silbert, who is of course the founder of Grayscale, thinks that one of the obstacles that repels big investors is precisely that the Chinese have too much power in their hands when it comes to Bitcoin. If the situation were to change in a way that mining power and mining equipment production is moved to the US, then confidence in Bitcoin as an investment would likely increase.

In other words, investing in Bitcoin mining should have a positive impact on the business of other companies within the DCG group, and it is possible that mining will be profitable as well. I think the whole thing is doable, but only if politicians can be persuaded to support the idea - and if lobbyists get to the right people, few would resist the fact that it's an industry worth over $10 billion a year (mining + equipment manufacturing).

That struck me too. No one lasted very long pursuing anything other than ruthless profit so I dunno how he's framed this with his board or whatever. They're not going to care about future geopolitics if they're burning untold millions per month today.

An interesting article, not only because of the mining farm itself, but also because of the context in which the article was written. Silbert looks at this endeavor not only from a profit perspective, but from a geopolitical and economic perspective that goes in the direction of relocating mining power and creating new jobs in the US, with of course taking advantage of electricity surpluses where they exist.

The article also mentions "lawmakers and policy groups in Washington, DC" who are becoming concerned about China's influence in the industry - and in light of the trade war between the two countries, it would be realistic to expect the US to take the initiative - there is only one small problem, Trump attitude towards Bitcoin, and we all know that is negative.

It may be interesting to note that DCG has three other subsidiaries, and one of them is Grayscale which is currently buying very significant quantities of Bitcoin for its fund.

It remains to be seen whether the Barry Silbert vision can be realized. I hope it will have more luck than Bitmain and some others.

100 millions of bitcoin mining and the fact

"Foundry, which has been operating below the radar since 2019, runs its own mining operations and also provides equipment and financing to crypto startups."

wow the mining industry right now same like drug cartel  

https://fortune.com/2020/08/27/bitcoin-mining-dcg-foundry-north-america-btc/

Barry Silbert made an announcement of an announcement yesterday. Guess this is it.

From reading this I didn't realise Bitmain's plans to mine in Texas had gone up in smoke. Hope this lot have done their sums.