By Adam Tarlowski

Innovative Bitcoin miners are getting creative in order to maximize their profits.

Given the energy-intensive nature of the pursuit, getting the optimal energy price has often led miners to explore remote parts of the world. But a new, potentially more profitable trend is emerging, signaling a shift in strategic focus. Layer1, a Peter Thiel backed Bitcoin miner, is leading the charge on a new, innovative strategy for energy management in the space. Large mining players should take notice to avoid being left behind.

Where are Layer1’s headquarters? Not Russia or China, but West Texas. Layer1 has prioritized a short time frame strategy that focuses its efforts to yield the highest profit margins. Having contracted a large amount of power to utilize off the local grid, Layer1 has realized the supply and demand of Texas’s power grid fluctuates enough for Layer1 to strategically sell back that contracted power onto the grid when the pricing is high enough. They maintain the flexibility to turn back on their operations when power is cheap (usually in the middle of the night!) and can operate with extreme profit margins during those time windows.

The strategy is wildly profitable with Layer1 citing a “700% return” at times when it is selling its power back onto the grid. As the wind picks up overnight, the mining operation directs its power to mine Bitcoin while electricity is abundant at a very low cost. The company balances its desire to mine Bitcoin with the needs of the Texas grid to guarantee profitability. As a result, Layer1 successfully generates high-profit margins whether or not they are mining Bitcoin. This trend shift isn’t just about better profit margins, it signals more at stake for the future of Bitcoin and mining.

Mining is a key component of the Bitcoin network – more mining means a higher-functioning network. A typical Bitcoin miner balances a number of profitability factors – including hash rate, block reward, mining difficulty, Bitcoin’s price, along with the cost of electricity, and power consumption. Adopting Layer1’s strategy may minimize the significance of other deterrent cost factors and encourage more miner participation in the network. In addition, this strategy reduces the carbon footprint of Bitcoin mining, providing more incentive to continue the proof of work model, and dispelling concerns regarding environmental harm of the model. Lastly, in a world concerned about renewable resources and environmentally friendly practices, approved Bitcoin mining companies with high power usage needs will look to renewable resources like the wind while providing additional liquidity and stability to electricity markets. This strategy may inspire other major players outside of crypto to question how they are consuming power and how they can optimize their operations for a more cost-effective, environmentally friendly model.

A win-win for Bitcoin and the world!