Issue #010: The Rise of Nation State Mining
Dear subscriber,
Welcome to The Bitcoin ESG Forecast #010.
My last letter covered the post-2021 Bitcoin mining landscape in China and its implications for Bitcoin's ESG narrative.
In today's issue, we're taking a look at three nations who are using Bitcoin mining to raise their economic fortunes and energy independence.
We'll also highlight:
Two new US states protecting the fundamental right to own and trade Bitcoin
A company reviving a forgotten form of renewable energy using Bitcoin
My first introductory session for people new to Bitcoin
Let's dive in.
Main Story
Much has been spoken about El Salvador’s Bitcoin investment strategy. But did you know that some Nation States are earning just as much through another Bitcoin investment strategy?
Bitcoin mining. Yes, mining has proved as lucrative as HODLing Bitcoin to entire nations.
This newsletter reports on how Bitcoin mining is helping lift the fortunes of three nations in three different continents.
Before we press ahead, a quick reminder that from June this newsletter will become a paid-subscription letter. After two years countering Bitcoin FUD virtually full time, your support in this transition will help me to more of this important work.
This month Nayib Bukele tweeted that El Salvador is up $83M profit on their Bitcoin investment strategy.
Let’s see how this compared to three nations doing, or actively inviting, Bitcoin mining.
1. Ethiopia’s on course to earn an additional $92M through Bitcoin mining by year-end.
Ethiopia has, in the last few years, made ~$70 million a year exporting hydro-power to its neighboring countries.
Now Ethiopia is selling an increasing amount of electricity to miners. Why?
Ethiopia exports electricity to Djibouti (up to 300 MW), Sudan (100 MW) , and Kenya (400 MW) to generate foreign exchange. To put that in context, 1 MW is enough to power ~1000 households. So 1 GW is enough to power a mid-sized city.
Last year, the country exceeded that, exporting 1701 GW of electricity to these nations. Ethiopia’s plan was to increase the export amount to 2993 GW this year (2023), which was expected to earn $182 million. This means they are getting paid less than $10/MWh: a very low cost of power.
I spoke to Jaran Mellerud, founder of Hashlabs Mining recently, who confirmed he expected they were only receiving in the $10/MWh range. He added “Now Ethiopia is selling an increasing amount of electricity to miners for $31/MWh, without the need to invest in expensive transmission lines.”
There are currently 200MW of power now being sold to Bitcoin mining companies. So that’s an additional $21/MWh. This means an additional $36 Million to Ethiopia’s economy per year (difference in price per MWh)x200 (number of MW)x8760 (number of hours in the year).
Jaran expects Bitcoin mining companies to be taking 500MW by year end, meaning a total of $92 Million to the national economy over and above what they could have earn through power exports.
2. Paraguay’s economy over $100M richer through Bitcoin mining.
Paraguay’s Senate recently approved a resolution to sell energy surplus to bitcoin miners, criticizing the sale of energy to Brazil for “25% of what bitcoin mining generates”, directing this energy to 20 new bitcoin mining companies instead.
Senator Salyn Buzarquis stated that selling energy for Bitcoin mining allowed the National Power Administration (ANDE) to earn over $100 million yearly, with “never before seen” guarantees from companies in the sector.
According to Buzarquis, over 45 bitcoin mining companies installed in Paraguay pay between $40 -$52 per MWh. Side note: Anecdotally, I’ve heard of mining companies getting lower rates, more like $37/MWh, but those are the exceptions.
3. Bhutan
100MW is currently exported to India, at a good price of 5.8 Taka/kWh (over $60/MWh) according to the Times of India. The Times also reports that this is set to increase sixfold to 600MW by Q2 2025 !
$60/MWh would not be appealing to cheap-energy hungry Bitcoin miners, so it’s likely this move has more to do with Bhutan developing its energy independence; lessening its reliance on one customer (India) for its surplus power.
Summary:
Bitcoin mining is to energy independence as Bitcoin is to monetary independence. Additionally, in two of the three cases, a small nation is adding significantly to its budget each year through enabling Bitcoin mining. The use cases for Bitcoin mining just keep on growing in number and in impact.
Top Picks
Earlier this month, Louisiana became the 11th state to pass a bill protecting the fundamental right to buy, sell, and trade Bitcoin with a unanimous vote of 103-0. Oklahoma State also joined on April 27th, adding to the growing list of states, including Ohio, Mississippi, and South Carolina, safeguarding citizens' Bitcoin ownership rights.
Meanwhile, the International Monetary Fund recently published a paper on Bitcoin cross-border flows with three deductions
Bitcoin can be used to hedge global uncertainty as investors ditch risk assets.
People are turning to Bitcoin to flee the instability of local currencies and circumvent capital controls.
Bitcoin flows are more in emerging and developing markets.
Meanwhile, the body of peer-reviewed scientific literature endorsing Bitcoin's net-positive environmental potential continues to grow. Six such peer-reviewed articles have been produced in the last 18 months. I've compiled this list into a tweet you can reference in the future.
Trailblazers
OceanBit, who is developing OTEC (Ocean Thermal Energy Technology) was recently profiled in Forbes Magazine. OTEC was mothballed in the 1980s for political rather than technological reasons. OceanBit aims to produce abundant baseload renewable energy, using Bitcoin mining to make the technology economically viable.
Tether completed its $500M investment in Bitcoin mining, a plan unveiled in November 2023 when Tether began investing in mining projects with a dual renewable energy/decentralization focus.
Swan Mining now commands 7.5 EH/s in Bitcoin mining. The rapid expansion is backed by a $100M investment. Swan now has mining operations both inside and outside USA, and is looking to grow more international sites.
Top Features
I recently hosted an introductory session on #Bitcoin aimed at newcomers, which garnered positive feedback and sparked considerable interest in Bitcoin adoption.
The session delved into various aspects, including Bitcoin's potential as an investment, its social and environmental benefits, and dispelling common misconceptions (April 25 | 59 min watch).
I also got the opportunity to discuss with @WalkerAmerica about Bitcoin mining with landfill methane on THE Bitcoin Podcast (April 11 | 101 min watch).
Housekeeping Notes
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See you next month!