Sébastien Gouspillou: "We can easily cope with bitcoin at $6,000 or $7,000".

The Big Whale: How do you explain that companies as large as Core Scientific are on the brink of bankruptcy?

Sébastien Gouspillou: There are essentially two reasons for this. The first is that they took on too much debt when the markets were rising. The second is that they obviously didn't anticipate such an increase in energy prices ⚡ ️

One of my customers, who has part of his business in the United States, recently explained to me that his rates had more than doubled in one year (from 3.5 to 7.8 centimes per kilowatt-hour). For him, it's no longer worthwhile mining. Then you have to look at it state by state. The country is huge and several states mine under different conditions.

Is US mining doomed in the medium term?

Not necessarily. There are still power stations, especially gas-fired, that are far from full capacity and there is also a lot of gas available, particularly in Canada. Given the price of gas, mining using this - carbon-based - energy is not going to disappear there any time soon.

Could Bitcoin's hashrate, which measures the computing power that protects the network, fall?

On paper yes, of course, but at the same time it's interesting that it still isn't falling while the price of bitcoin has fallen sharply.

This situation shows that miners are hanging on despite the particularly complicated market conditions. It's all to do with the price of electricity: as long as you can pay your bill, there's no point in stopping mining. For those who were already there a few years ago, the market looks a bit like the one we observed in 2018.

The miners who are doing best are those who have negotiated a fixed electricity tariff. Is this the key?

These contracts are signed over several years, at least three to five years. This is clearly the best strategy, because simply plugging into the grid exposes you to price volatility.

Recently, however, we've seen that fixed prices can change if demand for local electricity soars. In such cases, prices that are supposed to be "fixed" can move upwards, which will upset your business and force you to go mining elsewhere. And believe me, you don't want to. It's a hell of a logistical process to move machines!

What's your view on the evolution of energy prices? Miners are perhaps the best experts on this subject...

I think prices will continue to rise, or at least remain at current levels. Everything is increasing: demand for energy, energy companies' revenues, etc. Structurally, I don't see how prices can continue to rise. Structurally, I don't see how things could develop any other way. That's why our strategy for the last three years has been to go and find 'lost electricity', where there is no competition to consume it.

There are surpluses everywhere, we just have to go and find them. Eventually, I think there will be a lot of competition between bitcoin miners around renewable energy sources.

To what extent might rising energy prices favour miners who use renewable energy?

We mainly work with hydroelectric and geothermal-based energy. Our biggest installation is in the Virunga National Park in the Congo.

There, local demand does not absorb all the production and we use the surplus to mine. There's room for improvement. With this energy, we can comfortably make do with a bitcoin at $6,000 or $7,000.