Layer 1 is a cryptocurrency 'start up' backed by dollar billionaire Peter Thiel. According to the report in Forbes, the company has been busy with container-style and size steel boxes in a region of West Texas, where working conditions are difficult. These boxes with high processors were also immersed in mineral oil cooling baths. So why was West Texas chosen to do all this? Because, thanks to the excess of natural gas and wind turbines, this region is one of the places where energy is the cheapest… And this is exactly what you need in crypto business.

90 percent earnings from 1 Bitcoin

Alex Liegl, co-founder and CEO of the company, said: "Bitcoin mining is turning electricity into money." says. This fall, Layer 1 will buy dozens of these boxes and use these 100 megawatt floating boxes for Bitcoin production. Liegl said that the costs per 1 bitcoin are a thousand dollars with this method and they make a 90 percent profit considering the BTC price, which is now around 9 thousand dollars. So it is strange that the fact that Bitcoin mining devices will be shut down this summer excites Liegl.

Texas has seen a temperature of 37 degrees this year… However, the temperature and humidity that are within the expectations in the region do not occur until August. This causes the power units in Texas to not operate fully efficiently and the units have serious difficulties when all the air conditioners in the region are open. In a busy week in 2019, wholesale electricity prices in the region of units managed by the Texas Electricity Assurance Council (ERCOT) rose from about $ 120 per megawatt / hour to $ 9,000. This was the third time in Texas history. Although this price increase lasted only about 1 hour, it was enough to make a huge profit. Researcher analyst Hugh Wynne states that 1% of Texas energy producers' highest price hours coincides with about 15% of their annual income. (However, in generators of the more temperate California region, 1% of the top price period provides an annual rate of only 3%).

Profit is also possible with Arbitrage

It is also possible for Bitcoin miners to follow all these price fluctuations and profit by arbitrage. The Layer 1 company was included in an application called "Demand-response contracts", so it will shut down all its machines when a 1-minute price alert is received and allow 100 MW loads to enter the system. "We act as an insurance officer for the energy network," said Liegl on the matter. The best part of this technology is that you are making any kind of money regardless of whether there is a problem in the network. In the event that they stop bitcoin production, Layer1 earns $ 19 per megawatt / hour of expected premium demand annually, or about $ 17 million annually. Given that the costs of Layer 1 in its long-term contracts are roughly $ 25, this reduces all costs by almost 75 percent and brings out less than 1 cent per kilowatt. (Equals only 10 percent of electricity payments in houses)

“Network operators may seem to pay a lot of money for something that won't happen to Layer1, but this is completely logical nowadays when the coronavirus also reduces electricity demand. It's a much cheaper option than just building a new power plant to keep it on hold. ”Comments.

Technology was used twenty years ago

On the other hand, although this seems like a new system for crypto miners, this technology has been used before. Twenty years ago, industrialist Charles Hurwitz bought and used strong aluminum casting companies in the Northwest Pacific and used it to generate electricity. The company earned more than it earned while making metal. Dan Delurey, a consultant at the Wedgemere Group, said, “This was called load management. In older commercial buildings, you can still find telephone wires connected to air conditioning systems so network operators can send a signal to shut down. ” spoke as.

Recently, we see that many companies have used radio-based devices to control the temperature of hot water or lighting systems. Network management has become a very hot industry in this sense. For example, in 2017, Italy's energy giant Enel bought the Boston-based US company Enernoc for $ 250 million and Itron ITRI bought Comverge for $ 100 million. Delurey describes these new companies as 'prosumer', which is a combination of the words producer and consumer.

“Mining with a home computer is like digging a hole in the garden and waiting for oil”

Liegl stated that they will turn directly to financial products including Bitcoin derivatives. We will turn this place into a virtual energy facility later on. ” Liegl also sent messages to those who still want to mine from the computers in their bedrooms, and said, “I can't see anything more illogical right now. "It looks like I dig a hole in my backyard and wait for oil to come out of it."


Manuel has three years of editorial experience, specializing in language translation editing. He has got immense experience in writing about technology, business and finance. His stories have been published and circulated around the globe by various media outlets.

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