Ben Strack

Though the prevalence of bitcoin miners using nuclear energy at scale could take years to materialize, several players in the space are bullish on the prospect.&nbsp;



Volatility around bitcoin and the general slow pace of movement in an often risk-averse power industry could serve as barriers though, industry participants said.&nbsp;



Bitcoin miner TeraWulf recently revealed it is setting up operations at a nuclear energy-powered data center in Susquehanna, Pennsylvania, as part of a partnership with Talen Energy forged in 2021.



The company is targeting 50 megawatts (MW) of mining capacity at the site, with a hashrate capacity of about 1.6 exahashes per second (EH/s).&nbsp;



TeraWulf began operations at its other site in upstate New York last March, using hydro and solar power at the facility. It is now set to commence mining at the nuclear plant by the end of the quarter.&nbsp;



Nuclear, natural gas and coal provide base load — a minimum level of power on a grid over a period of time. Renewable energy, such wind and solar sources, have intermittent load, meaning they are not continuous.&nbsp;



“Given the significant penetration of renewables, what’s been happening with a lot of these base-load facilities is they’re not running at base load anymore,” Nazar Khan, TeraWulf’s co-founder and chief operating officer, told Blockworks. “They were looking and saying the optimal way to run a nuclear facility is for it to just run.”



Khan added that the set-up allows for a bitcoin miner to be an asset to a system that rarely uses peak demand. While TeraWulf gets a reliable and carbon-free energy source to mine bitcoin, the nuclear plant can guarantee a number of megawatts coming off their generators each day.&nbsp;



“If we could do five more deals like Talen, we would,” he said. “We’ve had discussions with the largest nuclear operators in the country down to folks who have a couple of sites.”



Khan said the conversations are ongoing, declining to share the specific nuclear operators TeraWulf is in talks with.&nbsp;



<h3 class="wp-block-heading">How do other miners view nuclear energy sources?</h3>



TeraWulf is not the only miner bullish on using nuclear power.



While Marathon Digital has not yet made nuclear power a major part of its strategy, it sees the energy source as a potential key part of the future. The company doubled its hashrate in 2022 to 7 EH/s and expects to have 23 EH/s of capacity installed near the middle of 2023.&nbsp;



“When we, and I think a lot of other bitcoin miners, realized how much stranded or wasted wind and solar [energy] there was…that became a pretty good target for bitcoin miners,” said Charlie Schumacher, Marathon’s vice president of corporate communications. “Because you’re looking for stranded, wasted energy; you don’t want to compete with consumers for electricity.



“So I think that was low-hanging fruit initially, but long-term nuclear makes a ton of sense,” he told Blockworks.&nbsp;



UK-based Lake Parime, a company focused on transforming energy into zero-carbon computing power, revealed in November that it launched a site in Ohio using 100% nuclear energy.



The 20 megawatt (MW) site’s hosting clients are Marathon and TAAL, a company that offers blockchain services and infrastructure.&nbsp;&nbsp;



Schumacher said the Ohio site is a good way for Marathon to “test the waters” about potentially using nuclear energy on a larger scale.



“We’re definitely interested if we can find a site that works for us,” he said. “If you just think of the nuclear sites that exist today, we would be happy to co-locate next to one and serve as a base-load customer for them.”



Lili Rhodes, a senior mining analyst at Compass Mining, called nuclear power an ideal power source for bitcoin miners in a September 2021 <a href="https://compassmining.io/education/nuclear-power-opportunities-bitcoin-mining/" target="_blank" rel="noreferrer noopener">blog post</a> — noting that it is energy efficient and cheap.



William Foxley, Compass Mining’s director of media and strategy, told Blockworks that Compass Mining has a few mines connected to larger grids partially run on nuclear energy.&nbsp;



The company secured a 20-year partnership with Oklo, a fission company that had a proposed power plant being reviewed by the US Nuclear Regulatory Commission. But Foxley said Compass Mining’s deal with Oklo is on pause until its partner receives more regulatory clarity.&nbsp;



The current power strategy of Riot Blockchain, meanwhile, focuses on having a large, flexible load in Texas’s <a href="https://www.ercot.com/" target="_blank" rel="noreferrer noopener">ERCOT</a> grid, according to CEO Jason Les. This includes various emission-free energy sources, including wind, solar and nuclear.



Les did not return a request for further comment.&nbsp;



Hive Blockchain, another publicly traded miner, does not use nuclear energy, CEO Aydin Kilic said.



“Our focus has been hydro and geothermal, which do not produce waste,” he told Blockworks. “Nuclear is treated as non-emitting but it is not a renewable green energy source like hydro and geothermal.”



<h3 class="wp-block-heading">Barriers to overcome</h3>



Schumacher called the nuclear energy industry an “intensely regulated space” with few new sites.&nbsp;



Rhodes wrote in the 2021 blog post that nuclear power is demonized by the mainstream media and feared by the general public. Many people associate the word nuclear with bomb, Schumacher added, further slowing the pace of adoption.



The newest reactor to enter service is Tennessee’s Watts Bar Unit 2, which began operation in 2016, according to the <a href="https://www.eia.gov/" target="_blank" rel="noreferrer noopener">US Energy Information Administration</a> (EIA). The next-youngest operating reactor is Watts Bar Unit 1, also in Tennessee, which opened in 1996.&nbsp;



Overall, there were 92 nuclear reactors operating at 54 nuclear power plants in 28 states, as of July 2022, EIA data shows. Nuclear power plants have supplied about 20% of total annual electricity used in the US since 1990.



While nuclear energy is a great source of power for bitcoin miners in theory, Schumacher said, it takes two sides to form a partnership.



“I think like many folks in the power industry, they’re risk-averse,” he added. “They think in terms of decades and bitcoin thinks in terms of months or days sometimes.”



Jonathan Cobb, senior communication manager at the World Nuclear Association, told Blockworks that bitcoin’s volatility in recent months could pose an issue.&nbsp;



Bitcoin’s price is down 66% from its all-time high reached in November 2021, and various miners have struggled to pay back debt it took on to expand during the bull run. <a href="https://blockworks.co/news/compute-norths-business-goes-south">Compute North</a> and <a href="https://blockworks.co/news/bitcoin-miner-core-scientific-to-file-bankruptcy-stock-tanks-30">Core Scientific</a> have filed for bankruptcy in recent months, and industry watchers have said they <a href="https://blockworks.co/news/more-crypto-miner-bankruptcy-2023">expect more casualties</a> in the space this year.



“Will bitcoin miners be in a position to agree to supply contracts that would be mutually beneficial?” Cobb said. “This would be less of an issue for other types of data centers with more certain business models.”



Khan said the drastic fluctuating margins of the bitcoin mining industry through market cycles has turned off some nuclear power executives. Others in the power industry aren’t sold on bitcoin as an asset more generally, he added. 



Still, Khan said he believes as the bitcoin mining space <a href="https://blockworks.co/news/crypto-miner-consolidation-imminent-as-some-industry-players-struggle">consolidates and matures</a>, it has a place in the nuclear energy segment.&nbsp;



“We would love for it to be the majority,” he said of nuclear energy as a power source for TeraWulf long term. “It’s a zero-carbon base-load resource, so in terms of how it fits into what we’re doing, it’s a wonderful resource to have.”



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Bitcoin mining

Going Nuclear: Bitcoin Mining’s Potential Energy Future

<div id="highlights-block_62d000428e097" class="highlights">
 <ul>
 <li>Riot Blockchain sold 300 of the 421 BTC it produced in June to help cover operational expenses</li>
 <li>Hut 8 Mining plans to continue growing its computing business that generates $1.6 million in revenue per month</li>
 </ul>
 
</div>



To hold or to sell — that is the question facing many cryptocurrency mining operations. Hut 8 is firmly taking the former approach.



Sue Ennis, Hut 8’s vice president of corporate development, told Blockworks that the company has no intention of selling its bitcoin any time soon.



The Canada-based company has 70 million CAD (about $53 million) on its balance sheet and an uncorrelated computing business generating 1.6 million CAD in revenue per month, Ennis noted. Unlike some competitors, she added, Hut 8 does not have large outstanding capital commitments for machines from orders made during the bull market.&nbsp;&nbsp;



“Last year and well into this year we have focused on how we can diversify our revenue and take a balance sheet-first approach to when we’re buying machines and at what price point we paid for machines, so that we didn’t have to be in a situation, if things went sideways, where we had to sell this very valuable finite asset that we’re all chasing,” she said.



Ennis said Hut 8 would most likely only consider selling bitcoin if the asset’s price jumps well above its all-time highs — pointing to bullish long-term estimates from JPMorgan analysts and Ark Invest CEO Cathie Wood of bitcoin <a href="https://cms.blockworks.co/jpmorgan-says-bitcoin-is-13-overvalued/" target="_blank" rel="noreferrer noopener">hitting $150,000</a> and <a href="https://www.barrons.com/articles/bitcoin-could-hit-500-000-according-to-ark-invests-catherine-wood-51605906264" target="_blank" rel="noreferrer noopener">$500,000</a>, respectively.&nbsp;



“At that point, maybe it would turn into sell a little bit, reinvest it back into the [computing] and Web3 side of our business,” she explained. “But again, we have no intention right now and no actual price point that we’ve got on our radar.”



Learn more: <a href="https://cms.blockworks.co/bitcoin-mining-economics-explained/">Is Bitcoin Mining Still Profitable? The Economics Explained</a>



Bitcoin’s price was about $19,700 at 8 am ET, down roughly 71% from its peak of nearly $70,000 last November.&nbsp;



While Hut 8 Mining seeks to hold its bitcoin for the foreseeable future and continue to grow its cloud computing business, other miners have sold or plan to sell BTC as the crypto downturn drags on.



<a href="https://cms.blockworks.co/crypto-miner-bitfarms-sells-half-its-bitcoin-to-reduce-debt-boost-liquidity/" target="_blank" rel="noreferrer noopener">Bitfarms revealed last month</a> that it had sold 3,000 BTC in a one-week span. Chief Financial Officer Jeff Lucas noted that the sales were the best and least expensive source of liquidity in the current market environment.&nbsp;



Texas-based <a href="https://cms.blockworks.co/tag/riot-blockchain/" target="_blank" rel="noreferrer noopener">Riot Blockchain</a> started selling a portion of its monthly bitcoin production in March. The company sold 300 of the 421 BTC it produced in June — gaining net proceeds of about $6.2 million — to help cover operational and other expenses. Riot held roughly 6,654 BTC, as of June 30.&nbsp;



The company continues progress on its 400 megawatt infrastructure expansion project at its Whinstone facility in Rockdale, Texas.



“It’s still important to us to have a strong bitcoin balance sheet, so we haven’t sold from the balance sheet per se,” Riot Blockchain CEO Jason Les told Blockworks, noting the firm has sold between 40% and 75% of its monthly bitcoin production. “There’s not a strict framework or policy around that. It’s a decision we are evaluating on a monthly basis.”



Compass Point Research &amp; Trading analysts Chase White and Joe Flynn said in a June 28 research note that while they expect Riot to take on new debt or sell more of its bitcoin output, “the company is well-positioned to weather the volatility in the BTC market given its lack of debt and substantial BTC holdings.”



Hive Blockchain Technologies said in a statement last week that during “challenging times in the market cycle,” its expansion plans will be funded through the selling of its current product of bitcoin and ether (ETH).



The company has been selling ether over the past year to expand its bitcoin footprint, as its ETH position sank from 25,000 ETH to 7,667 ETH. But Hive said in the July 7 update that it seeks to maintain its bitcoin inventory levels, which stood at 3,239 BTC on July 6.



<a href="https://cms.blockworks.co/tag/marathon-digital/" target="_blank" rel="noreferrer noopener">Marathon Digital</a>, which held 10,055 BTC as of June 30, has not sold any bitcoin since October 2020, Charlie Schumacher, the company’s vice president of corporate communications, told Blockworks.



“While we are long-term believers in bitcoin, our decision to continue to HODL is a strategic one, not necessarily a principle,” he said.



<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">“Bitcoin is a tool that we can leverage. By holding it, we can increase our financial optionality.”</blockquote>



The mining company obtained a $100 million revolving line of credit, secured by bitcoin and USD, with Silvergate Bank last October.



“That being said, given that we produce BTC at a fairly healthy margin, it may make sense for us to sell a portion of our monthly bitcoin production as our production ramps [up] as needed to fund monthly operating costs,” Schumacher said.



<h3 class="wp-block-heading">Hut 8 growing its computing business</h3>



Though mining remains Hut 8’s core business — accounting for about 90% of its revenue — Ennis said the company will focus more on its cloud computing and Web3 business. Hut 8 has been gearing up to do so since last year, the executive added, noting that the current macroeconomic downturn did not drive the decision.&nbsp;



Ennis said that its computing business is on track to grow roughly 15% year over year as it seeks to serve more Web3 and blockchain-focused clients.



“Obviously the entire crypto industry has suffered, but at the end of the day, projects still need storage,” she said. “Projects still need security. Projects, especially in the blockchain gaming space, still need digital and render. So it is pretty sticky revenue regardless of what the macro economy is doing.”



Hut 8 acquired five data centers in Canada from wireless connectivity company TerraGo in January. The buy came after <a href="https://www.linkedin.com/in/jaime-leverton-she-her-3033a911/?originalSubdomain=ca" target="_blank" rel="noreferrer noopener">Jaime Leverton</a>, who has a background in data infrastructure transformation, took over as Hut 8’s CEO in December 2020.



Ennis <a href="https://cms.blockworks.co/bitcoin-miner-targets-gaming-web3-with-cloud-services-expansion/" target="_blank" rel="noreferrer noopener">told Blockworks in March</a> that Hut 8 is looking to provide an alternative to cloud computing giants such as Amazon Web Services, Google Cloud and Switch.



Hut 8 inherited government clients, as well as customers in media and entertainment and financial services using its cloud computing services. Though Ennis declined to disclose any new clients on the Web3 side, it has a nine-person sales team building a pipeline.&nbsp;



<h3 class="wp-block-heading">Mining consolidation coming soon?</h3>



Steve Russell, co-portfolio manager of Emerald Mutual Funds’ Finance and Banking Innovation Fund (HSSAX), <a href="https://cms.blockworks.co/qa-community-banks-moving-forward-with-crypto-plans-despite-downturn-portfolio-manager-says/" target="_blank" rel="noreferrer noopener">told Blockworks last week</a> that he expects a “shakeout” over the next year or so from which winners and losers in the mining space emerge.



White and Flynn wrote in their research note that lower BTC prices — they estimate averages of $21,500 and $34,000 in the second half of 2022 and all of 2023, respectively — will likely “put a lid” on global hash rate growth.



Ennis said mergers and acquisitions are something that has been on the company’s radar, particularly following the company’s $172 million raise last September.



“I think there’s still some pain to be had,” Ennis said of the sector’s companies.



<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">“We’ve certainly seen miners selling to pay down their balance sheet and capital commitments for equipment, but we still think there’s still a way to go.”</blockquote>



Les said Riot Blockchain constantly looks at potential merger and acquisition deals.



“We think that with our strong, unlevered balance sheet, we are in a position to be opportunistic here,” he said.



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Crypto Mining Firms Take Different Approaches to Selling Bitcoin

Shalini Nagarajan

<div id="highlights-block_62c7d1a64d87a" class="highlights">
 <ul>
 <li>Compass was recently accused of failing to pay an electricity bill</li>
 <li>Crypto miners have been selling bitcoin to meet operating expenses</li>
 </ul>
 
</div>



Cryptocurrency mining and hosting firm Compass Mining is eliminating staff after two top executives stepped down last week, admitting it “grew too quickly.”



In a <a href="https://education.compassmining.io/education/changes-at-compass-mining-a-message-from-co-ceos-paul-and-thomas/" target="_blank" rel="noreferrer noopener">statement</a> on Thursday, the firm’s recently appointed interim CEOs Thomas Heller and Paul Gosker said the size of the team would be reduced by 15%. Senior employees and the executive team have taken pay cuts of up to 50%, they added.



While Compass’ website doesn’t point to a specific employee headcount, its LinkedIn lists 83 employees. That suggests about 13 people have lost their jobs.



“While painful, these changes will enable Compass to stay agile and well-positioned in this evolving market, which has challenged many of our industry peers,” the interim CEOs wrote.&nbsp;



“Of all the decisions we have had to make as new CEOs, this will be far the hardest, and we take full responsibility for all of the changes that have been, and will be made, under our leadership.”



Compass <a href="https://cms.blockworks.co/compass-mining-appoints-two-interim-ceos-in-bid-to-rekindle-goodwill/" target="_blank" rel="noreferrer noopener">appointed</a> Heller and Gosker on June 28 after former CEO Whit Gibbs and Chief Financial Officer Jodie Fisher resigned. While the reason for their resignation was unclear, Compass <a href="https://compassmining.io/education/compass-mining-announces-ceo-resignation-and-naming-of-interim-leadership/" target="_blank" rel="noreferrer noopener">acknowledged</a> the “setbacks and disappointments” that detracted the company from its objective to make crypto mining easy and accessible.



In late June, the company faced accusations by hosting firm Dynamics Mining over an alleged failure to pay power compensation charges. Compass denied the claims and said Dynamics operated only about 1% of its contracted capacity.



“Compass has performed all of its obligations under its contracts with Dynamics, including its financial obligations,” it said in a <a href="https://compassmining.io/education/compass-mining-denies-dynamics-facility-allegations/" target="_blank" rel="noreferrer noopener">statement</a>.



The downturn in cryptocurrency markets, alongside a liquidity crisis in the crypto lending space, has forced several companies to cut costs or let go of employees. Exchanges and lenders including <a href="https://cms.blockworks.co/coinbase-cut-workforce-ceo-wary-of-potential-recession/" target="_blank" rel="noreferrer noopener">Coinbase</a>, <a href="https://cms.blockworks.co/cryptocurrency-lender-blockfi-set-to-cut-staff-by-a-fifth/" target="_blank" rel="noreferrer noopener">BlockFi</a>, <a href="https://cms.blockworks.co/gemini-joins-growing-list-of-crypto-exchanges-cutting-staff-amid-downturn/" target="_blank" rel="noreferrer noopener">Gemini</a>, <a href="https://cms.blockworks.co/crypto-com-cutting-5-of-workforce-amid-digital-asset-downturn/" target="_blank" rel="noreferrer noopener">Crypto.com</a>, <a href="https://cms.blockworks.co/coinbase-backed-vauld-cuts-workforce-by-30-seeks-to-halve-exec-pay/" target="_blank" rel="noreferrer noopener">Vauld</a> and <a href="https://cms.blockworks.co/bullish-joins-rival-crypto-exchanges-in-cutting-workforce-report/" target="_blank" rel="noreferrer noopener">Bullish</a> are just some of the well-known names affected.&nbsp;



<a href="https://cms.blockworks.co/bitcoin-mining-economics-explained/" target="_blank" rel="noreferrer noopener">Bitcoin miners</a> seem to be the next on the chopping block — some have been selling their mined bitcoin due to revenues slumping along with the bear market, said Marcus Sotiriou, analyst at digital asset broker GlobalBlock.



Driven by recent market turmoil and rising energy costs, Core Scientific <a href="https://www.businesswire.com/news/home/20220705005347/en/Core-Scientific-Announces-June-Updates" target="_blank" rel="noreferrer noopener">said</a> on Tuesday it sold 7,202 bitcoin for about $167 million in June — leaving the miner with just 1,959 bitcoin and about $132 million in cash. Meanwhile, <a href="https://argoblockchain.com/news-room/2022-june-operational-update" target="_blank" rel="noreferrer noopener">Argo Blockchain</a>, <a href="https://bitfarms.com/app/uploads/2022/06/Bitfarms-PR-22-07-01-JuneProduction.Final73.pdf" target="_blank" rel="noreferrer noopener">Bitfarms</a>, <a href="https://www.riotblockchain.com/news-media/press-releases/detail/132/riot-blockchain-announces-june-2022-production-and" target="_blank" rel="noreferrer noopener">Riot</a> and <a href="https://www.cleanspark.com/investor-relations/news-releases/" target="_blank" rel="noreferrer noopener">CleanSpark</a> have also sold their bitcoin reserves to pay for operating expenses.

Compass Mining Searches for Direction After Top Execs Resign

Sebastian Sinclair

<div id="highlights-block_62bbcd26cbeaf" class="highlights">
 <ul>
 <li>Compass&#8217; board of directors has appointed Chief Technology Officer Paul Gosker and Chief Mining Officer Thomas Heller as interim co-presidents and CEOs</li>
 <li>The appointments come as Compass has been caught up in a string of accusations from crypto hosting firm Dynamics Mining over Compass&#8217; alleged failure to meet its power consumption charges</li>
 </ul>
 
</div>



Bitcoin mining and hosting firm Compass Mining has appointed two new interim CEOs following the resignation of the firm&#8217;s head Whitney Gibbs and Chief Financial Officer Jodie Fisher.



The embattled mining company — supplier of ASICs and operator of bitcoin mining operations — said Tuesday it has appointed Chief Technology Officer Paul Gosker and Chief Mining Officer Thomas Heller as interim co-presidents and CEOs.



<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">&#8220;Through this restructuring, the company is wholly focused on regaining the goodwill of our stakeholders and the community, as well as delivering on our mission of providing best-in-class service for miners of all sizes,&#8221; Compass said in a <a href="https://compassmining.io/education/compass-mining-announces-ceo-resignation-and-naming-of-interim-leadership/" target="_blank" rel="noreferrer noopener">company post</a> Monday via its website.</blockquote>



Compass&#8217; board of directors will begin seeking out a permanent president, CEO and CFO immediately, the firm said. The appointments come as Compass has been caught up in a string of accusations by hosting firm Dynamics Mining over its alleged failure to meet its power consumption charges. 



Blockworks attempted to contact Compass but did not receive a response by press time. Blockworks also spoke with one employee who declined to comment.



Dynamics, which had a contract with Compass, said it terminated its &#8220;Master Hosting Service Agreement&#8221; with the Delaware-based supplier earlier this month, citing six late payments and three nonpayments, the company said in a <a href="https://twitter.com/DynamicsMining/status/1541262827096358912?s=20&amp;t=gY1fUlOyqcCIxybvZ-BUeQ">tweet</a> Sunday.



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">For clarity <a href="https://twitter.com/compass_mining?ref_src=twsrc%5Etfw">@compass_mining</a> power consumption <a href="https://twitter.com/Dynamics2k?ref_src=twsrc%5Etfw">@Dynamics2k</a> totaled $1.2 million and they only paid $415k and $250k initial power deposits. Compass claims that they gave money to <a href="https://twitter.com/Dynamics2k?ref_src=twsrc%5Etfw">@Dynamics2k</a> but the money was used to build out their facilities. <a href="https://twitter.com/hashtag/truth?src=hash&amp;ref_src=twsrc%5Etfw">#truth</a> <a href="https://t.co/9esvuCFulO">pic.twitter.com/9esvuCFulO</a>&mdash; DynamicsMining (@DynamicsMining) <a href="https://twitter.com/DynamicsMining/status/1541403191815950337?ref_src=twsrc%5Etfw">June 27, 2022</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



In a June 10 <a href="https://twitter.com/DynamicsMining/status/1541262827096358912?s=20&amp;t=Kbmo6bc7PXrlvobbE4HJ3A" target="_blank" rel="noreferrer noopener">letter</a> to Gibbs from law firm Gordon, Fournaris &amp; Mammarella, P.A., acting on behalf of Dynamics, Compass is accused of failing to pay its utility bill as well as monthly hosting fees. Oxford and Lewiston, both Dynamics facilities maintained by Compass, also failed to make payments in violation of the agreement, the law firm said.



&#8220;All you had to was pay $250k for 3 months of power consumption,&#8221; Dynamics said in a <a href="https://twitter.com/DynamicsMining/status/1541568140118745089?s=20&amp;t=gY1fUlOyqcCIxybvZ-BUeQ" target="_blank" rel="noreferrer noopener">follow-up tweet</a> on Monday. &#8220;Since you don&#8217;t give your clients their Serial Numbers I couldn&#8217;t even help them. Twitter is the voice of your customer base, not the courtroom.&#8221;



Compass, however, denied the accusations levied against it, claiming Dynamics &#8220;misunderstood&#8221; the contracts it had signed with respect to Dynamics&#8217; facilities, according to a <a href="https://compassmining.io/education/compass-mining-denies-dynamics-facility-allegations/" target="_blank" rel="noreferrer noopener">separate post</a> late Tuesday.



&#8220;Compass has performed all of its obligations under its contracts with Dynamics, including its financial obligations,&#8221; the firm said. Dynamics operates approximately 1% of Compass Mining’s contracted capacity, according to Compass.



Accusations against Compass come as large numbers of bitcoin miners face <a href="https://cms.blockworks.co/crashing-prices-expose-bitcoin-mining-industrys-addiction-to-leverage/" target="_blank" rel="noreferrer noopener">possible liquidation</a> after taking out high-interest loans to fund their spending habits when bitcoin prices were relatively buoyant.



Depressed crypto prices, accelerated by recent developments with Terra&#8217;s stablecoin <a href="https://cms.blockworks.co/?s=Terra" target="_blank" rel="noreferrer noopener">collapse</a> and crypto lender Celsius&#8217; <a href="https://cms.blockworks.co/?s=Celsius" target="_blank" rel="noreferrer noopener">liquidity woes</a>, now appear to be eating into profitability margins for the mining hosting firms supplying the picks and shovels to crypto miners.



Miners rely on three main areas for keeping business activity out of the red, including a higher bitcoin price, lower or cheaper electricity prices and access to high-performance specialty mining rigs known as ASICs (application-specific integrated circuits).



All three elements, amid the market downturn, are now causing headaches for miners, as well as their creditors and other counterparties including mining operators and ASIC suppliers.



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<li><a href="https://blockworks.co/newsletter/0xresearch">0xResearch</a>: Alpha directly in your inbox.</li>



<li><a href="https://blockworks.co/newsletter/lightspeed">Lightspeed</a>: All things Solana.</li>



<li><a href="https://blockworks.co/newsletter/thedrop">The Drop</a>: Apps, games, memes and more.</li>



<li><a href="https://blockworks.co/newsletter/supplyshock">Supply Shock</a>: Bitcoin, bitcoin, bitcoin.</li>
</ul>

Compass Mining Appoints Two Interim CEOs in Bid To Rekindle ‘Goodwill’

<div id="highlights-block_62223ef8c67f5" class="highlights">
 <ul>
 <li>Another former Block executive joined crypto payment company MobileCoin</li>
 <li>An ex-Citi executive was tapped to lead the growth of the Provenance Blockchain</li>
 </ul>
 
</div>



Ledger named Alex Zinder as vice president of Ledger Enterprise Solutions, as the executive will also join the company’s executive committee.



Zinder joined <a href="https://enterprise.ledger.com" target="_blank" rel="noreferrer noopener">Ledger Enterprise</a> in March 2021 after almost two decades in capital markets technology. He previously worked at Nasdaq in director of global software development and associate vice president of enterprise architecture roles.



Zinder will lead Ledger Enterprise Interact, a newly launched set of solutions allowing clients to manage interactions in smart contract-enabled protocols that support staking, non-fungible tokens (NFTs) and other decentralized finance (DeFi) opportunities.



Compass Mining hired Jodie Fisher as its chief financial officer and Ro Shirole as its chief growth officer as the online marketplace for bitcoin mining hardware, hosting and reselling seeks to streamline its growth.



Fisher has taken companies through seed rounds, private equity financing, exit strategies and initial public offerings during her time as the CFO of several early stage technology companies and a controller at IBM.



Shirole, who was formerly vice president of business development at digital currency infrastructure company Compute North, will focus on expanding Compass’s reach from serving retail clients to also serving funds, family offices and institutional clients.



Crypto payment company MobileCoin added Alan Paulin as its vice president of engineering. Paulin joins from Block (<a href="https://cms.blockworks.co/jack-dorseys-square-to-change-its-name-to-block/" target="_blank" rel="noreferrer noopener">formerly Square</a>), where he was director of engineering.&nbsp;



Paulin has also worked as a senior development lead at Microsoft, where he helped design Virtual Earth, and later was a senior software engineer at Google.



He becomes the second former Block employee to join MobileCoin, as Bob Lee, who was Block’s chief technology officer from 2010 to 2014 became the crypto business’s chief product officer in December.



The Provenance Blockchain Foundation named former Citi executive Morgan McKenney as its CEO. She will seek to partner with financial institutions, fintechs and developers to drive adoption of the open source, public blockchain, which is designed specifically for the financial services industry.



McKenney most recently served as special adviser at Centre, a consortium to promote the use of fiat-backed stablecoins. She also spent nearly 20 years at Citi in a range of senior executive roles, including chief operating officer for global consumer banking.



Crypto platform Descrypto Holdings, formerly known as W Technologies, hired Creenagh Flynn as its chief marketing officer.



Flynn was most recently a creative director for advisory and international relations firm MidAtlantic Capital Management and the CEO of business development solutions business Crave Genius, according to her LinkedIn page.&nbsp;



Bitcoin miner TeraWulf appointed Michael Bucella and Kerri Langlais to its board of directors as the company is focused on building a 100% zero-carbon energy grid.



Bucella is a partner and the global head of strategic partnerships and business development at crypto investment firm BlockTower Capital. He previously spent nearly a decade with Goldman Sachs running its multi-asset sales and trading business in Canada.



Langlais is TeraWulf’s chief strategy officer and is responsible for overall corporate strategy, business development, strategic partnerships and growth initiatives.



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Alan Paulin

Latest in Crypto Hiring: Ledger Enterprise Has New Leader

<div id="highlights-block_62042cf927e76" class="highlights">
 <ul>
 <li>Russia’s central bank and President Vladimir Putin will have to reconcile their divergent views on digital assets</li>
 <li>The country accounts for 11% of the world’s bitcoin mining, giving lawmakers a large incentive to properly regulate the industry</li>
 </ul>
 
</div>



Russia’s “unsurprising” move to regulate cryptocurrency is expected to spur other countries to follow suit, according to industry participants.



Following a <a href="http://static.government.ru/media/files/Dik7wBqAubc34ed649ql2Kg6HuTANrqZ.pdf" target="_blank" rel="noreferrer noopener">framework</a> drawn up by <a href="https://cms.blockworks.co/russia-moves-to-recognize-crypto-as-a-form-of-currency/" target="_blank" rel="noreferrer noopener">Russia’s government and central bank</a>, policymakers are expected to draft fresh legislation or amend existing laws to oversee crypto as a currency. The measures, according to Russia, will stabilize any broader economic impacts from digital assets.



Anto Paroian, chief operating officer at digital assets investment fund ARK36, said Russia’s response to the rise of crypto reflects a broader shift in nations conceding the technology is here to stay.&nbsp;



“Overall, authorities [are starting to] recognize that crypto is becoming such an entrenched part of how people think about and deal with money in the digital age that the political and economic cost of banning it appears to be far greater than the risk involved in allowing it to coexist with the legacy financial systems,” Paroian told Blockworks via email.



Time is of the essence before international bodies start to influence policy, according to Nick du Cros, head of compliance and regulatory affairs at CoinShares.



“These proposals will likely send the message that countries should enact local regulations quickly and not wait for the [Group of Seven] to set international standards,” du Cros said, referring to the political forum made up of Canada, France, Germany, Italy, Japan, the UK and the US.



Anthony Pompliano, founder of Pomp Investments, wrote in a Wednesday newsletter that Russia turning a “sympathetic” ear to crypto — including putting digital assets on its balance sheet — would “force the hand of the United States.”



“There is a global competition underway that has a decentralized, open system at the heart of it; anyone can plug into the system,” Pompliano wrote. “The game theory is that no one wants to start the cascade, but once your adversary does it, you are forced to adopt the technology or risk being left behind.”



The US, at any rate, will be closely watching developments in Russia, which is set to draw up legislation by Feb. 18, including standards for taxing crypto.&nbsp;



The measures come after Russia’s central bank last month <a href="https://www.cbr.ru/Content/Document/File/132242/Consultation_Paper_20012022_eng.pdf" target="_blank" rel="noreferrer noopener">proposed</a> restricting the circulation and exchange of cryptocurrencies, banning crypto investments by financial institutions and prohibiting crypto mining.



Since, Russian President Vladimir Putin said he supports a plan to tax and regulate mining, referring to “competitive advantages” Russia could gain from crypto mining.



Members of the US Congress, meanwhile, <a href="https://cms.blockworks.co/crypto-industry-will-move-offshore-if-congress-doesnt-act-executives-warn/" target="_blank" rel="noreferrer noopener">have held hearings</a> on crypto in recent months, and industry watchers <a href="https://cms.blockworks.co/crypto-companies-brace-for-year-of-regulation-in-2022/" target="_blank" rel="noreferrer noopener">expect more regulatory clarity</a> this year. A <a href="https://cms.blockworks.co/bipartisan-bill-proposes-tax-exemption-for-small-crypto-transactions/" target="_blank" rel="noreferrer noopener">bipartisan bill introduced last week</a> proposed tax exemptions for crypto transactions of $200 or less.



The US and Russia both have big economic incentives to get a plan in place, considering the latter accounts for about 11% of the world’s bitcoin mining, and the former controls 35%, according to the University of Cambridge’s <a href="https://ccaf.io/cbeci/mining_map" target="_blank" rel="noreferrer noopener">Bitcoin Electricity Consumption Index</a>. Both countries boosted their hashrate following China’s mining ban.



Whit Gibbs, CEO of Compass Mining, — which operates two mining facilities in Siberia, Russia —&nbsp; pegged the country’s approach as “do-no-harm,” adding that Russia has made solid strides in wooing international investors to set up mining operations there.



“I think most nations are already considering taking similar actions to recognize bitcoin and cryptocurrencies as currency,” Gibbs said. “This positive outcome hopefully influences other nations to take the same official stance.”



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Anthony Pompliano

Russia’s Move to Regulate Cryptocurrency Puts Other Countries on Notice

<div id="highlights-block_6149f1e3db56a" class="highlights">
 <ul>
 <li>While some retail miners prefer a hands-off approach through Compass&#8217; hosting services, demand for do-it-yourself offering is on the rise</li>
 <li>Compass raised $1.7 million in seed funding in March with participation from Galaxy Digital, CoinFund and CoinShares</li>
 </ul>
 
</div>



Compass Mining has launched a service for consumers to purchase bitcoin mining equipment for their home as an alternative to having to pay remote hosting facility fees to mine $BTC.



Founded in 2020, Compass Mining is a bitcoin-first company seeking to support the decentralized growth of hashrate, which is vital for ensuring network security. The company helps customers buy, ship and install mining hardware and arranges for it to be hosted at mining facilities with favorable power rates.



Compass raised $1.7 million in seed funding in March with participation from Galaxy Digital, CoinFund and CoinShares.



The company’s latest service delivers application-specific integrated circuit, or ASIC, mining machines to customers’ doors. Compass offers Bitmain’s Antminer S19 and MicroBT’s Whatsminer M30S, and orders ship within two weeks.



Machines available on Compass’s website range in cost from $8,200 to $10,400. The new offering comes at a time when hashrate has been recovering following a steep drop caused by <a href="https://cms.blockworks.co/bit-digital-cashes-in-on-chinese-mining-exodus/" target="_blank" rel="noreferrer noopener">an abrupt exodus</a> of mining operations from China to the rest of the world, <a href="https://cms.blockworks.co/bitcoin-mining-shifts-to-n-america-amid-fee-compression/" target="_blank" rel="noreferrer noopener">including North America</a>.



<figure class="wp-block-image size-full"><img loading="lazy" decoding="async" width="1014" height="343" src="https://blockworks-co.imgix.net/wp-content/uploads/2021/09/Screenshot-2021-09-21-at-17.46.47.png" alt="Bitcoin network hashrate" class="wp-image-8323" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2021/09/Screenshot-2021-09-21-at-17.46.47.png?w=1014 1014w, https://blockworks-co.imgix.net/wp-content/uploads/2021/09/Screenshot-2021-09-21-at-17.46.47.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2021/09/Screenshot-2021-09-21-at-17.46.47.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2021/09/Screenshot-2021-09-21-at-17.46.47.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2021/09/Screenshot-2021-09-21-at-17.46.47.png?w=470 470w, https://blockworks-co.imgix.net/wp-content/uploads/2021/09/Screenshot-2021-09-21-at-17.46.47.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2021/09/Screenshot-2021-09-21-at-17.46.47.png?w=80 80w" sizes="auto, (max-width: 1014px) 100vw, 1014px" /><figcaption>Unit:  Hashes per second; Source: <a href="https://bitcoinvisuals.com/chain-hash-rate" target="_blank" rel="noreferrer noopener">BitcoinVisuals</a></figcaption></figure>



<h3 class="wp-block-heading">Can retail users compete?</h3>



“While industrial mining operations and retail miners primarily use Compass to help them secure space in one of our 23 hosting facilities around the world, we have found that there is significant interest from our customer base to set up operations in their own home,” Compass Mining CEO Whitney Gibbs said in a statement. 



Since ASIC mining machines were introduced in 2012, large corporations with hundreds of thousands of machines have dominated the market, the firm noted.



A surge in at-home mining interest occurred in hand with this year&#8217;s surge in general demand for cryptocurrency mining products and services from retail clients, a spokesperson told Blockworks, adding that mining profitability is near record levels. That comes despite the fact that ASIC lifecycle is typically just 2-4 years, before they either wear out or require upgrades due to improvements in mining technology.



Compass hosts thousands of machines at its two dozen or so mining farms around the world with power costs that are generally much cheaper than North American residential power costs, the representative added. At-home miners typically pay higher electricity rates than miners hosting through Compass, and profitability calculators are available online for them to model their prospective revenue, costs and profit.



Unlike some other competitors, Compass doesn&#8217;t manufacture its own mining hardware. <a href="https://coinmine.com/pages/faq" target="_blank" rel="noreferrer noopener">Coinmine</a>, for example, offers a crypto device that can be set up from any iOS or Android device, and can run anywhere with a wifi connection. The machine can mine cryptocurrencies and then store them in a user’s in-app digital wallet.



<hr class="wp-block-separator"/>
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