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Key Talks: Interview with Jaran Mellerud

Bitcoin mining, the role of MinerMetrics, key market drivers including the hashprice and the upcoming halving, expected growth in specific regions, and challenges for companies entering the market

Mark Galkevich
November 2, 2023
Key Talks
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Founder of MinerMetrics

How did you start your career in Bitcoin mining, and could you tell us about MinerMetrics?

I studied energy management at university and became fascinated by bitcoin mining as a mechanism to stabilize the electric grid and monetize excess energy. I was so fascinated by mining that I wrote my master's thesis on the subject, and to this day, I think I am the only person who has written a master's thesis on bitcoin mining in my home country of Norway. My master's thesis opened up the doors for me to enter the exciting bitcoin mining industry, allowing me to get to know miners all over the world, from the United States to Kazakhstan to Norway. Now, I'm running my own company, MinerMetrics. MinerMetrics is an analytics platform helping bitcoin mining investors gain alpha through industry-leading research and insights. MinerMetrics also helps investors buy and operate bitcoin mining machines.

What is the significant key factor that drives the Bitcoin mining market the most, and why?

Like most industries, the bitcoin mining sector is heavily influenced by the industry's revenue potential. The hashprice is the expected miner revenue per unit of hashrate and is determined by the bitcoin price, the mining difficulty and the transaction fees. The bitcoin price is the most volatile of these factors and has historically had the most impact on the hashprice, but in late April 2024, the halving will cut the block subsidy in half. This will naturally have a massive impact on the industry.

What challenges are we facing for the growth of the market?

The most significant challenge and growth barrier in the bitcoin mining sector in the coming months is the halving in late April 2024. Miner revenues will be cut in half overnight, leading to a considerable amount of marginal mining operations becoming cash flow negative. I estimate that 20-25% of Bitcoin's hashrate will go offline after halving. The revenue reduction will also lead to lower profits for the surviving miners.

Which regions do you think are expected to experience the highest growth in the Bitcoin Miner market?

Currently, around 45% of Bitcoin's hashrate originates from the United States. After the halving, I expect most growth to come from frontier markets with exceptionally cheap electricity, like Africa, South America, and Southeast Asia. The highly competitive pressure in the bitcoin mining industry, particularly considering the upcoming halving, will force miners to look to new regions for growth.

Are there any challenges that companies are facing for entering the Bitcoin Miner market, and what advice would you give to them?

Bitcoin mining is an exceptionally competitive industry where the only possible competitive advantage is achieving lower costs than competitors. Therefore, I generally advise miners only to enter this market if they have access to extremely cheap electricity. In addition, Bitcoin mining is an ultra-cyclical industry where it is advisable to invest countercyclically. That means that right now, as there is little investment going on in the sector, it should be a good time to make investments.

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