PayPal’s Peter Thiel-backed Layer1 Opens Renewable Energy-Focused Bitcoin Mining Facility
- Early Facebook investor, Peter Thiel-backed Layer1 is “first US-based vertically-integrated Bitcoin mining company”
- Lay1’s facility power is “heavily skewed” towards wind sources, with “some natural gas component”
PayPal founder and early Facebook investor, Peter Thiel is the latest one to join the bitcoin mining business.
As the crypto market gets back on the bull track with 85% increase in prices in 2019 after the crypto winter of 2018, investors are also jumping the bitcoin train. 2020 has already started on a positive note with Bitcoin price breaching the important $10,000 psychological level.
Layer1 is the “first US-based vertically-integrated Bitcoin mining company,” that raised Series A financing at a $200M valuation with the backing of Thiel in Oct. last year. The mission of the company is to “strengthen Bitcoin’s decentralization and usage of renewable energy.”
Bitcoin Mining Remains a Bright Spot
The company announced the opening of the first bitcoin opening facility that would be spread out on 30 acres of land and costing tens of millions of dollars.
Bitcoin mining involves pouring millions into the high-power processors to secure and track transactions on the bitcoin network and earn 12.5 BTC (currently worth about $119,375) per block as well. Currently, the cost of mining is just above $6k, for a big farm it is even lower, while BTC is currently trading at $9,550.
However, as hash rate continues to increase, and bitcoin rewards to be cut in half after halving in May, this cost will increase but if the price rises as expected, it is going to be highly profitable for miners.
Bitcoin mining surely remains a bright spot in the market while other companies in the space make staff layoffs. In 2019, companies like Bitfarms, Bitmain, and Hut 8 expanded their mining facilities while hash rate continues to hit new highs.
Back in August, Blockstream revealed massive bitcoin mining facilities as well, with Fidelity as its early customer.
Taking Advantage of Texas’s Low Electricity Cost
Layer1’s new facility is about 100 miles west of Midland, Texas to take advantage of the low electricity costs, one of the biggest costs in Bitcoin mining as founder and CEO Alexander Liegl said, “the cheapest electricity in the world, at scale, is in West Texas right now.”
Electricity is cheap in the region because of the natural gas being produced through fracking, market deregulation, and large renewable energy investments from subsidies from the state government. Lay1’s facility power Liegl said is “heavily skewed” towards wind sources, with “some natural gas component.”
But Texas has one big disadvantage, heat for which Layer1 has designed the equipment, an oil-based coolant that insulates the equipment from the outside temperature. This not only prolongs its life but also allows it to run the hardware at higher power settings and even overclocking. Regardless of the weather, liquid cooling allows Layer1 to access affordable energy and beat its competitors.
Previously China-focused, bitcoin mining has started to spread out as well. China controls about two-thirds of the network’s processing power, but “over the past three to six months” there has a “real growing shift toward attempts to move a lot of that activity outside of China into specifically the U.S. and Canada,” shared Barry Silbert, founder of New York-based Grayscale Investments last week.