Mining/compute is complimentary to renewable growth.
Compute will (and should) be commoditized, as it represents a critical utility for the modern world.
Power represents the backbone of the present and future of compute.
The Energy Information Agency (EIA) recently noted “Last year, the U.S. electric power sector produced 4,090 million megawatthours (MWh) of electric power. In 2022, generation from renewable sources—wind, solar, hydro, biomass, and geothermal—surpassed coal-fired generation in the electric power sector for the first time.” This is an interesting dichotomy: bitcoin mining also surged in the US, and yet there is a pervasive misbelief that bitcoin mining promotes fossil generation.
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The Energy Information Agency (EIA) recently noted “Last year, the U.S. electric power sector produced 4,090 million megawatthours (MWh) of electric power. In 2022, generation from renewable sources—wind, solar, hydro, biomass, and geothermal—surpassed coal-fired generation in the electric power sector for the first time.” This is an interesting dichotomy: bitcoin mining also surged in the US, and yet there is a pervasive misbelief that bitcoin mining promotes fossil generation.
The connection between BTC mining and more renewables is simple: additional loads allow additional investments, and currently the best generation investments in terms of risk/reward metrics are solar and wind, with natural gas right behind them in certain locations – all to the detriment of coal. If loads did not maintain or grow, investments in generation would not happen. In addition, the basic driving force for mining is power cost. BTC mining attracts the lowest cost power, and unlike other loads, the BTC mining world can handle variability. This makes renewables and bitcoin mining a match made in heaven.
Critics of BTC may have legitimate reasons, but rationale minds see that these reasons cannot be environmental. With efficiency improvement and more distributed generation via solar panels, utilities need load in order to turn over the existing fleet. Digital compute (processing and mining) offer the ability for this load to help turn over the fleet. Data centers need to develop a “decentralized” compute mechanism to allow the user experience to be seamless, as the data may come from multiple centers, and some may have to turn off to help balance the system during certain moments in the day.
Compute will eventually be a commodity – it will be sent to data centers/compute refiners to produce the desired outcomes for customers. Trading of compute vs. the current framework of single-source fixed-term contracts will unlock immense value for the consumer and the economy. Similar to the quest of lowering power cost for the consumer, FERC decided to deregulate the power industry. There will be at some point a desire to unlock compute. Unlike the power industry, the compute world does not have decades of cost with multiple jurisdictions clinging to control. The current oligopoly of compute (Amazon, Microsoft, Google) will gain in value as the compute world expands, even if the market is commoditized, given the vast volume of compute that will be running our daily lives. Compute access will likely become as essential as clean water, so it would be prudent for the oligopoly to support an open market structure before the government comes in and forces a utility-like approach to compute.
Power is still the backbone of this world. Discriminating power usage between BTC mining and compute used for other purposes should be up to market forces, not the government. What the government can do well is inform and nudge the issues to keep in check individual greed for the overall benefit of the market.
The power markets need compute growth. As noted in last week’s BitOoda power report, PJM load growth is very dependent on data centers. The best way to make this happen is to commoditize compute. At BitOoda, we hold expertise along the entire value chain of compute. It will become increasingly important to be knowledgeable in power and zero knowledge proofs in order to create an effective ecosystem. Please reach out to us to discuss opportunities to work with us as we shape this future.
Purpose
This research is only for the clients of BitOoda. This research is not intended to constitute an offer, solicitation, or invitation for any securities and may not be distributed into jurisdictions where it is unlawful to do so. For additional disclosures and information, please contact a BitOoda representative at info@bitooda.io.
Analyst Certification
David Bellman, the research analyst denoted by an “AC” on the cover of this report, hereby certifies that all of the views expressed in this report accurately reflect his personal views, which have not been influenced by considerations of the firm’s business or client relationships.
Conflicts of Interest
This research contains the views, opinions, and recommendations of BitOoda. This report is intended for research and educational purposes only. We are not compensated in any way based upon any specific view or recommendation.
General Disclosures
Any information (“Information”) provided by BitOoda Holdings, Inc., BitOoda Digital, LLC, BitOoda Technologies, LLC or Ooda Commodities, LLC and its affiliated or related companies (collectively, “BitOoda”), either in this publication or document, in any other communication, or on or through http://www.bitooda.io/, including any information regarding proposed transactions or trading strategies, is for informational purposes only and is provided without charge. BitOoda is not and does not act as a fiduciary or adviser, or in any similar capacity, in providing the Information, and the Information may not be relied upon as investment, financial, legal, tax, regulatory, or any other type of advice. The Information is being distributed as part of BitOoda’s sales and marketing efforts as an introducing broker and is incidental to its business as such. BitOoda seeks to earn execution fees when its clients execute transactions using its brokerage services. BitOoda makes no representations or warranties (express or implied) regarding, nor shall it have any responsibility or liability for the accuracy, adequacy, timeliness or completeness of, the Information, and no representation is made or is to be implied that the Information will remain unchanged. BitOoda undertakes no duty to amend, correct, update, or otherwise supplement the Information.
The Information has not been prepared or tailored to address, and may not be suitable or appropriate for the particular financial needs, circumstances or requirements of any person, and it should not be the basis for making any investment or transaction decision. The Information is not a recommendation to engage in any transaction. The digital asset industry is subject to a range of inherent risks, including but not limited to: price volatility, limited liquidity, limited and incomplete information regarding certain instruments, products, or digital assets, and a still emerging and evolving regulatory environment. The past performance of any instruments, products or digital assets addressed in the Information is not a guide to future performance, nor is it a reliable indicator of future results or performance.
Ooda Commodities, LLC is a member of NFA and is subject to NFA’s regulatory oversight and examinations. However, you should be aware that NFA does not have regulatory oversight authority over underlying or spot virtual currency products or transactions or virtual currency exchanges, custodians or markets.
BitOoda Technologies, LLC is a member of FINRA.
“BitOoda”, “BitOoda Difficulty”, “BitOoda Hash”, “BitOoda Compute”, and the BitOoda logo are trademarks of BitOoda Holdings, Inc.
Copyright 2022 BitOoda Holdings, Inc. All rights reserved. No part of this material may be reprinted, redistributed, or sold without prior written consent of BitOoda.
The Energy Information Agency (EIA) recently noted “Last year, the U.S. electric power sector produced 4,090 million megawatthours (MWh) of electric power. In 2022, generation from renewable sources—wind, solar, hydro, biomass, and geothermal—surpassed coal-fired generation in the electric power sector for the first time.” This is an interesting dichotomy: bitcoin mining also surged in the US, and yet there is a pervasive misbelief that bitcoin mining promotes fossil generation.
The connection between BTC mining and more renewables is simple: additional loads allow additional investments, and currently the best generation investments in terms of risk/reward metrics are solar and wind, with natural gas right behind them in certain locations – all to the detriment of coal. If loads did not maintain or grow, investments in generation would not happen. In addition, the basic driving force for mining is power cost. BTC mining attracts the lowest cost power, and unlike other loads, the BTC mining world can handle variability. This makes renewables and bitcoin mining a match made in heaven.
Critics of BTC may have legitimate reasons, but rationale minds see that these reasons cannot be environmental. With efficiency improvement and more distributed generation via solar panels, utilities need load in order to turn over the existing fleet. Digital compute (processing and mining) offer the ability for this load to help turn over the fleet. Data centers need to develop a “decentralized” compute mechanism to allow the user experience to be seamless, as the data may come from multiple centers, and some may have to turn off to help balance the system during certain moments in the day.
Compute will eventually be a commodity – it will be sent to data centers/compute refiners to produce the desired outcomes for customers. Trading of compute vs. the current framework of single-source fixed-term contracts will unlock immense value for the consumer and the economy. Similar to the quest of lowering power cost for the consumer, FERC decided to deregulate the power industry. There will be at some point a desire to unlock compute. Unlike the power industry, the compute world does not have decades of cost with multiple jurisdictions clinging to control. The current oligopoly of compute (Amazon, Microsoft, Google) will gain in value as the compute world expands, even if the market is commoditized, given the vast volume of compute that will be running our daily lives. Compute access will likely become as essential as clean water, so it would be prudent for the oligopoly to support an open market structure before the government comes in and forces a utility-like approach to compute.
Power is still the backbone of this world. Discriminating power usage between BTC mining and compute used for other purposes should be up to market forces, not the government. What the government can do well is inform and nudge the issues to keep in check individual greed for the overall benefit of the market.
The power markets need compute growth. As noted in last week’s BitOoda power report, PJM load growth is very dependent on data centers. The best way to make this happen is to commoditize compute. At BitOoda, we hold expertise along the entire value chain of compute. It will become increasingly important to be knowledgeable in power and zero knowledge proofs in order to create an effective ecosystem. Please reach out to us to discuss opportunities to work with us as we shape this future.
Purpose
This research is only for the clients of BitOoda. This research is not intended to constitute an offer, solicitation, or invitation for any securities and may not be distributed into jurisdictions where it is unlawful to do so. For additional disclosures and information, please contact a BitOoda representative at info@bitooda.io.
Analyst Certification
David Bellman, the research analyst denoted by an “AC” on the cover of this report, hereby certifies that all of the views expressed in this report accurately reflect his personal views, which have not been influenced by considerations of the firm’s business or client relationships.
Conflicts of Interest
This research contains the views, opinions, and recommendations of BitOoda. This report is intended for research and educational purposes only. We are not compensated in any way based upon any specific view or recommendation.
General Disclosures
Any information (“Information”) provided by BitOoda Holdings, Inc., BitOoda Digital, LLC, BitOoda Technologies, LLC or Ooda Commodities, LLC and its affiliated or related companies (collectively, “BitOoda”), either in this publication or document, in any other communication, or on or through http://www.bitooda.io/, including any information regarding proposed transactions or trading strategies, is for informational purposes only and is provided without charge. BitOoda is not and does not act as a fiduciary or adviser, or in any similar capacity, in providing the Information, and the Information may not be relied upon as investment, financial, legal, tax, regulatory, or any other type of advice. The Information is being distributed as part of BitOoda’s sales and marketing efforts as an introducing broker and is incidental to its business as such. BitOoda seeks to earn execution fees when its clients execute transactions using its brokerage services. BitOoda makes no representations or warranties (express or implied) regarding, nor shall it have any responsibility or liability for the accuracy, adequacy, timeliness or completeness of, the Information, and no representation is made or is to be implied that the Information will remain unchanged. BitOoda undertakes no duty to amend, correct, update, or otherwise supplement the Information.
The Information has not been prepared or tailored to address, and may not be suitable or appropriate for the particular financial needs, circumstances or requirements of any person, and it should not be the basis for making any investment or transaction decision. The Information is not a recommendation to engage in any transaction. The digital asset industry is subject to a range of inherent risks, including but not limited to: price volatility, limited liquidity, limited and incomplete information regarding certain instruments, products, or digital assets, and a still emerging and evolving regulatory environment. The past performance of any instruments, products or digital assets addressed in the Information is not a guide to future performance, nor is it a reliable indicator of future results or performance.
Ooda Commodities, LLC is a member of NFA and is subject to NFA’s regulatory oversight and examinations. However, you should be aware that NFA does not have regulatory oversight authority over underlying or spot virtual currency products or transactions or virtual currency exchanges, custodians or markets.
BitOoda Technologies, LLC is a member of FINRA.
“BitOoda”, “BitOoda Difficulty”, “BitOoda Hash”, “BitOoda Compute”, and the BitOoda logo are trademarks of BitOoda Holdings, Inc.
Copyright 2022 BitOoda Holdings, Inc. All rights reserved. No part of this material may be reprinted, redistributed, or sold without prior written consent of BitOoda.