Core Scientific is focused on efficiency while hash price hits rock bottom

CEO Adam Sullivan spoke to Blockworks about the latest with Core Scientific at the Permissionless conference in Austin, Texas

article-image

ioda/Shutterstock modified by Blockworks

share

Core Scientific, one of the largest bitcoin miners in the US, is in the midst of a switch up in strategy, according to CEO Adam Sullivan.

Previously serving as president, Sullivan was brought on as chief executive in early August to steer the company out of bankruptcy.

And while Core Scientific continues to wade through the restructuring process, Sullivan told Blockworks that his first big push as CEO was to chase efficiency instead of focusing on the raw numbers of mining machines plugged in and hashing. 

“We are seeking ways to optimize performance and efficiency at both the data center and individual miner level. We are repositioning some of our machines between and inside of our facilities to increase post-halving profitability,” Sullivan said, adding that they want to “eke out the extra pennies, nickels and dimes wherever we can.”

Before Core Scientific filed for bankruptcy in December 2022, Sullivan stated that its primary strategy was to maximize the number of operational machines.

That calculus made sense in 2021 and 2022, especially when taking into account that mining profitability was at near all-time highs during a great portion of that two-year period, according to the Hashrate Index

In fact, Core Scientific purchased 112,800 Bitmain ASICs in late April 2021, right when bitcoin’s hash price was in the range of $300 to $400 a day per petahash per second (PH/s). 

Over two years later in August 2023, hash price has dropped off a cliff

The price hovers at nearly $63 per day per petahash per second (PH/s) as of Tuesday, indicating an approximately sixfold decrease since the 2021 bull run.

Sullivan also discussed the importance of making derivatives bets in a commodities market such as bitcoin mining. If done wisely, a bitcoin miner can lock in cash flow during times when the volatile commodity — in this case, bitcoin (BTC) — is in the midst of a downturn.

According to an example given by Sulivan, if bitcoin was trading around $30,000 and suddenly flashed up to $40,000, he would happily choose to hedge for the next three months at a rate of $40,000, rather than waiting in anticipation of a further increase.

When asked if he would pursue a scenario like that in the future, Sullivan said that once Core Scientific emerges from bankruptcy, “those are some of the types of opportunities we will be looking for.”

The publicly traded miner recently struck a $45 million deal with Celsius Mining, one firm Core Scientific used to host machines for, to end all litigation claims partly related to unpaid fees.

Core Scientific is scheduled for its disclosure statement hearing in the Southern District of Texas on Sept. 27, potentially enabling a vote on its second reorganization plan.


Don’t miss the next big story – join our free daily newsletter.

Tags

Upcoming Events

Salt Lake City, UT

WED - FRI, OCTOBER 9 - 11, 2024

Pack your bags, anon — we’re heading west! Join us in the beautiful Salt Lake City for the third installment of Permissionless. Come for the alpha, stay for the fresh air. Permissionless III promises unforgettable panels, killer networking opportunities, and mountains […]

recent research

ao cover.jpg

Research

Arweave recently launched the testnet for AO computer, a new messaging protocol that will sit atop a PoS network and aims to become a scalable global compute platform through parallel processing and modularity.

article-image

Plus, a Bored Ape burger restaurant closes, and Crypto: The Game presses on

article-image

Bitcoin scarcity is a meme, with or without the halvings

article-image

The current state of blockchain interoperability poses an existential threat to the mainstream adoption of blockchain technology as a whole

article-image

The fighting in pro wrestling is largely fake and the outcomes are mostly pre-determined, similar to Ethereum’s relationship with the crypto ecosystem

article-image

Shakeeb Ahmed was tied to two hacks, and the DOJ first filed an indictment against him in July of last year

article-image

HashKey is expected to be among the issuers who receive the green light, according to the report.