Lifecycle Mining™: The portfolio optimization strategy from Compute North

graphic of butterfly hatching from cocoon representing lifecycle mining

Date Published

11/23/2021

In the early days of crypto mining, the primary focus was on sourcing low-cost energy with maximum uptime in favorable climates that could support the performance needs of miners.

From there, priorities have shifted toward demand response programs as a means of lowering power costs, allowing data centers to become more of a partner to the grid rather than a parasitic load. This shift coincided with an increased focus on renewables as a percentage of the overall power composition.

Today, we view the next step for crypto markets as an overall optimization of your entire mining portfolio, beginning with the implementation of Lifecycle Mining. Here is a closer look at what Lifecycle Mining is and how it can serve to extend the lifespan and profitability of your miners while increasing your use of renewables to further your ESG initiatives.

The opportunity for Lifecycle Mining

The crypto industry today is facing never-before-seen pressures for renewable energy from market factors, investors, public markets, and federal, state, and local governments. There are also numerous challenges presented by the impending increase in hashrate over the course of the next 12-24 months.

To overcome these challenges, industry leaders must work together to strengthen our role as the largest catalyst for renewable energy investment, development, and innovation.

Lifecycle Mining aims to support this objective by:

  • Creating a path to extend the growth of your share of the global hashrate
  • Meeting and exceeding your renewables target as part of your broader ESG strategy
  • Increasing your profitability by reducing cost of power – the largest cost factor in your hosting rate

What is Lifecycle Mining?

The concept of Lifecycle Mining is centered around utilizing newer, more efficient miners at the top of the funnel and cascading down to lower-performing sites with better economics for the lower-performing miners in your portfolio.

In doing so, we extend the useful life of miners from 3-4 years to 6-8 years. As miner costs have increased due to chip supply and demand, the ability to depreciate those assets over a longer period of time has tremendous value – while also maintaining profitability. Lifecycle Mining also helps increase the blended percentage of renewable power utilization across your portfolio.

How Lifecycle Mining works

The cascading methodology of Lifecycle Mining takes place across three distinct types of hosting sites.

Site A

Site A fits a more traditional mining profile, with the highest-efficiency miners (like the Bitmain S19j Pro) capable of being placed at the highest available uptime sites that typically also come with the highest cost of power. Demand response programs are leveraged at these sites, with a target of 50-60% renewables being another key component.

Site B

Site B typically targets about two generations back from a mining portfolio perspective, with miners like the Bitmain S15 and S17 fitting within the profile. These lower-efficiency miners are placed at these sites defined by less uptime and a lower cost of energy.

These sites typically have an uptime of 80-95% with heavier curtailment and a higher mix of renewables (55-80%). In many cases, these sites are behind the meter, saving on transmission and distribution (TDSP) costs, adding significant value to your bottom line.

Site C

Site C is what we have affectionately dubbed the “retirement home for miners,” where end-of-life miners like the Bitmain S9 can settle in beside wind power and solar power sources. These sites have the potential to drive power costs even lower, with additional potential to achieve a negative cost-to-power with the requirement of an offtake of that power production.

These sites typically have a lower uptime (70%+), because of the variability in the energy supply (the wind is not always blowing and the sun is not always shining). Like the Site B profile, Site C is also almost always behind the meter to save on TDSP charges, taking advantage of a 100% renewable energy mix in nearly all cases.

The result of Lifecycle Mining is:

  • ROI optimization across your entire mining portfolio
  • Extended useful life of miners, allowing them to contribute to your share of the global hashrate
  • Increased use of renewables to help you meet your ESG requirements

Extend the life of your miners and strengthen your ESG strategy with Compute North

Compute North combines expertise in energy and technology infrastructure to play a leading role in the industry-wide shift toward sustainability and renewables.

Colocating your equipment in our TIER 0™ data centers offers the ability to optimize your mining strategy, while leveraging our renewable-heavy energy mix, and supporting the next-generation energy grid with our ability to participate in demand response programs.

Contact us today to start exploring hosting solutions for your operation.

Date Published

11/23/2021

Author

First Scribe

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