The Greenidge Power Plant, a New York-based producer of electricity and recently Bitcoin miner, revealed some details regarding their “BTC Hashpower Contract” in a press release on their website on April 8th 2020.
This contract will provide the company with upfront capital as they grow to provide US institutional investors with the ability to participate directly in the Bitcoin mining, and as the company likes to say, the power production business in one deal.
The contract itself was arranged by BitOoda Digital LLC (“BitOoda”), which is a financial product launched in January 2020, that enables the purchase and sale of large amounts of BTC mining hash power in a fully compliant way.
Greenidge has managed to hit the sweet-spot between running a mining facility for themselves and providing a platform for investors to participate in. We do not have any details regarding the length of the contract or its price, but we wanted to investigate and see what pieces of the puzzle we can put together.
Disclaimer: This article and any views and opinions belong solely to the author. This article is not and should not be considered as financial advice. Do your own research before investing anywhere.
Getting to the bottom of the deal
We were curious and although the public doesn’t have many of the details regarding the equipment in use by Greenidge, we were able to use investigative research and piece together some of the details of this arrangement.
This part of the article is speculative, as there is no way for us to confirm many of the details. However, we did our best research possible, and this is what we found out.
What we know from the start:
- The company has about 7000 Bitcoin miners.
- They use 15 MWs.
- The deal is for 106 PH/s (106000 TH/s)
- The cost of natural gas electricity per KWh is $0.06 (source)
Looking at the image provided in the press release, we suspect that they are using Bitmain’s S17+ miners, which provide 67 TH/s and use up 2680 watts of power.
First we need to figure out how many miners the company has included in this deal, and that’s not too difficult. We simply divide the hashpower against our suspected miner, i.e. 106000 / 67 = 1582 Bitcoin miners.
Next is the power usage, and that is also easy. 1582 Bitcoin miners with 2680 watts each spend 4239760 watts per hour, i.e. 4239.76 kWh.
The total price for operating these machines is $254.38 per hour, i.e. $6105 per day, i.e. $183157 per month.
But are investors making a profit with the Greenidge BTC contract?
Well, that’s as far as our math can take us, so we went ahead and put in all of the key figures in a mining calculator and got the following result. Keep in mind that we made some assumptions about the type and number of Bitcoin miners that the company uses.
According to Poolin.com, the contract is producing ~$12K USD per day in revenue, out of which $6K is pure profit. It seems that the deal is paying off for the investors. Although, we don’t know how much the buyers paid for the hashpower, it is clear as day that they are turning a profit.
With the Bitcoin Halving on the way, they need to make a decision in regards to when do they sell their BTC. Anything can happen after the halving, so it is extremely difficult to make the right decision.
Is Greenidge a good choice for investors?
From what we gather, the Greenidge BTC contract is a really safe and great choice for investors looking to join in the cryptocurrency industry. However, only institutional investors are able to participate and there is no indication that retail investors will be able to participate with smaller amounts.
Of course, this is not financial advice for anybody, and the crypto economy can change rapidly over the course of hours. What we are trying to say is that this contract currently is profitable for the investor, even if we don’t have the details to calculate how long it would take for them to get their investment back.
Greenidge is in a very peculiar situation because they are a power producer and a Bitcoin miner. In a way, this puts them in a position of power because they are able to use electricity without having to pay any premium for it. Other BTC mining farms should look towards Greenidge and provide mining contracts if they are not doing that already and capitalize on their previous investments.