The Big Whale: How do you explain the fact that companies as large as Core Scientific are on the verge of bankruptcy?

Sébastien Gouspillou: There are essentially two reasons for this. The first is that they took on too much debt when the markets were rising. The second is that they obviously did not anticipate such a rise in energy prices ⚡️

One of my clients, who has part of his business in the United States, recently told me that his rates have more than doubled in one year (from 3.5 to 7.8 cents per kilowatt hour). For him, it is no longer interesting to mine. Then you have to look at it state by state. The country is huge and several states mine with different conditions.

Is American mining doomed in the medium term?

Not necessarily. There are still power plants, especially gas-fired, that are far from full capacity and there is also a lot of gas available, especially in Canada. Given the price of gas, mining with this - carbon - energy is not about to disappear there.

Could Bitcoin's hashrate, which measures the computing power that protects the network, drop?

On paper yes, of course, but at the same time, it is interesting that it still does not go down while the price of bitcoin has fallen sharply.

This situation shows that miners are hanging on despite the particularly complicated market conditions. It's all about the price of electricity: as long as you can pay your bill, you have no interest in stopping mining. For those of you who were around a few years ago, the market looks a bit like what we saw in 2018.

The miners who fare best are those who have negotiated a fixed electricity rate. Is this the key?

These contracts are signed for several years, at least three to five years. This is clearly the best strategy because just plugging into the grid exposes you to price volatility.

Recently, however, we have seen that fixed prices can change if local electricity demand soars. In these cases, the supposedly "fixed" prices can go up, which will disrupt your business and force you to go mining elsewhere. And believe me, you don't want to. It's a lot of logistics to move machines!

What is your view on the evolution of energy prices? Miners are perhaps the best experts on this subject...

I think prices will continue to rise, or at least remain at current levels. Everything is going up: energy demand, energy companies' revenues, etc. Structurally, I don't see how things could change otherwise. That's why our strategy for the past three years has been to go out and find "lost electricity", where there is no competition to consume it.

There's surplus everywhere, you just have to go out and get it. Eventually, I think there will be a lot of competition among bitcoin miners around renewable energy sources.

To what extent might rising energy prices favor miners who use renewable energy?

We work mainly with hydroelectric and geothermal energy. Our largest installation is located in the Virunga National Park in Congo.

There, the local demand does not absorb all the production and we use the surplus to mine. There's room for improvement. With this energy, we can largely hold on to a bitcoin at 6,000 or 7,000 dollars.