Australia’s coal-powered bitcoin mining factory could go up in smoke
Deal could run out of steam before a single SAT sees light of day
The proposed plan to restart a defunct coal-fuelled power station in the Hunter Valley region in New South Wales in order to mine cryptocurrency such as bitcoin is far from a done deal.
The motivation to fire up the Redbank Power Station, which was shut down in 2014, is meant to give the company involved, the IoT Group, a way of mining coins in Australia and bypassing the electricity grid and wholesale electricity market. This is because power prices in Australia are too high to make the mining process economically viable.
In order for IoT Group to make this happen, they will need to fit the plant out for a mining operation. They are planning to use Bitfury servers for this that they will source from an integrator called Royalti Blockchain Group. IoT Group has told the Australian Stock Exchange (ASX) about this.
As you can already tell, there are quite a few things that have to line up before this can all come to fruition. The deal between IoT Group and Royalti Blockchain Group is also conditional on Hunter Energy being able to buy the plant, lock stock and barrel.
The critical element here is that the price of energy for consumers includes the cost of transmission and distribution infrastructure (poles and wires), access to the wholesale electricity market, charges levied by retailers for meter reading and several other factors. But by bypassing the entire wholesale market IoT Group could reduce the power cost by around 80%.
That tips the equation firmly in favour of being able to mine coins.
Another interesting element is that if the Redbank facility is connected to the electricity grid, it could choose to offer services back into the grid when they are more profitable than mining. For example, power generators can offer Ancillary Services.
There are times when the energy frequency falls outside the acceptable range. Generators can offer to add energy to the grid in order to arrest a frequency degradation at a cost to the market. But that would require market registration of the generator and puts other obligations on the IoT Group that they might not be willing to commit to.
So, while the ability to turn on the Redbank Power Station is possible, there are a number of other things that need to happen before the project actually goes ahead.
Disclosure: At the time of writing, the author holds BTC, EOS, ETH, XLM, ETN, LTC, ADA and XRP.
Latest cryptocurrency news
- Why Ethereum’s price is outperforming Bitcoin after Saturday’s crash
- Bitcoin price plummets overnight – experts think more drops may be on the way
- Ethereum within 2% of new all-time-high price as another global brand adopts NFTs
- Bitcoin’s stagnation is alarming and could be followed by more bearish price action
- Ethereum’s price rallies after adoption by a major Gulf State
Picture: Shutterstock
