EZ Blockchain Survives the Crypto Winter Using Its Innovative Solutions
BTC Price History
The 2017 Crypto Winter
Crypto winter is now a common term in the crypto community, typically used to describe a prolonged bearish trend in the crypto market that lasts several months. The first crypto winter occurred between 2017 and 2018. Bitcoin’s value rose consistently to hit $20,000 toward the end of 2017 and then began a downward trend. There were a series of noteworthy scams, and soon, Bitcoin and altcoins were on a rapid downstream. Three months into 2018, Bitcoin was down more than 80%, causing panic in the entire crypto industry.
Many companies suffered a knock-on effect and initiated widespread redundancies as they struggled to survive amid the looming cryptocurrency crash. Notably, we were still young after entering the market in 2017, so our company did not have a lot to lose in the crisis. We had only five employees, but in any case, we needed to survive. We had to learn to survive, mainly by managing cost and operating lean and mean. Sergii, the company CEO, lived off credit cards; at one point, his score was 550.
How we Survived
Agreeably, crypto winters have forced even high-flying Bitcoin mining companies into bankruptcy and forced crypto investors into panic selling. However, despite being a small firm, we survived the crisis by saving everything we had. We built our mining facility and installed all the miners by ourselves, primarily because we did not have the money to pay for the services.
Our main focus was on providing crypto mining hosting services working with small clients, but we were yet to break even by 2019. We did not take any investor money because it was typically unavailable. We were just a small firm, and no investor brought forward any offers. It was generally a super dark year for the entire industry, and nearly everyone stopped mining. For us, we had to sell our equipment to cover our bills. Still, we believed in Bitcoin and began to invent our 300 kw crypto mining container.
Later, we updated our mining containers to our current Smartboxes, model 2000 and model 3000. Model 3000 has 768 miners slots with up to 3.5 kW/h power consumption. Its power input can go up to 3000 kW/h. Model 2000 features 576 miners slots with up to 3.5 kW/h power consumption and a power input of up to 2250 kWh.
Our first mining container sale came in 2018. We sold a 2 MW+ container with a 720 miners capacity to Grineege, one of the first companies in the world to mine Bitcoin with natural gas. Our crypto mining containers market picked up. By the time we began receiving real offers from potential investors, we did not need them anymore because we were already successfully building facilities.
Surviving the 2nd Crypto Winter
The 2022 crypto winter was characterized by more unfortunate events accelerated by the ongoing global economic crisis. Investor confidence in cryptocurrency disintegrated massively, and again, many mining companies initiated layoffs, operational shutdowns, and bankruptcy proceedings.
However, we remained in good shape at EZ Blockchain despite the tough year. We optimize our expenses and avoid debts so we do not fall into bankruptcy. We utilize innovative solutions that allow us to operate at minimal cost while creating revenue streams for our company.
Here are our top five tips that helped us survive the second wave of crypto winter.
1. Minimizing Operational Costs
If you have been following up on the Bitcoin mining scene throughout the crypto winter, we can all agree that it brought the last-man-standing feel. Typically, Bitcoin miners have been playing a high-stakes game to survive amid the crisis. Most companies have had to make deep cuts in their expenditures and, in the worst cases, shut down operations and file for bankruptcy.
In any case, reducing operational expenses has been the way to go for surviving companies, including us at EZ Blockchain. Ideally, Bitcoin mining involves high-power computers that consume large amounts of power to crack the hashes in complex mathematical puzzles. As such, electricity is one of the most critical resources and the largest operating expense in Bitcoin mining.
Most Bitcoin mining companies are thus located near reliable energy sources, but with the skyrocketing power costs and plummeting Bitcoin prices, the profitability of mining activities is significantly undermined.
To put this into perspective, Bitcoin miners receive a 6.25 BTC block reward upon mining a block. Many miners have to sell the rewards to pay for their expenses, especially with most balance sheets struggling during the crypto winter. Energy costs are, however, higher than usual, and the mining rigs still consume the same amounts of electricity. As such, they have to pay more. On the other hand, they are earning way less from liquidating their BTC holdings since the prices have dropped to high lows. If the value of the rewards cannot meet the operating expenses, mining activities become unprofitable, which may force companies to shut down.
By reducing operational costs, miners cut down on their mining expenses, allowing them to remain operational until the end of the crypto winter. With a lower expenditure, the mining rewards can meet the critical expenses necessary for the company to survive. At EZ Blockchain, we utilize wasted energy to reduce our power costs and realize our green bitcoin mining goals. We also use wind, solar, gas, and nuclear, providing hosting services for miners looking to mine more efficiently.
2. Sell Your BTC Immediately Once It’s Mined
Early 2023 projections from crypto analysts suggested that the year will likely be about Bitcoin mining companies struggling to strengthen their balance sheets and improving operating efficiencies. Crypto mining companies that survived the tough year are now more concerned with reducing their debts and costs. Based on the turn of events during the first and second crypto winters, only miners with robust operating cashflows can survive.
However, like with any other production company, mining expenses usually directly impact the company’s operating cashflows and overall profitability. If a company can meet all of its production costs, it means there is the possibility of turning a profit, or at least it will remain operational amid a crisis. For Bitcoin miners, these costs determine when the company shuts down its miners when their operating cashflows can no longer meet the direct bitcoin production expenses.
Most companies hold a stack of Bitcoin from their block rewards in Bitcoin mining. As such, miners with small operating cashflows who find it difficult to meet the Bitcoin mining expenses can liquidate their block rewards as soon as they mine. That way, the company can pay for upcoming expenses and remain operational. It saves the company from selling other assets, such as mining equipment, or shutting down operations.
3. Switch to Only Low-Cost Power Facilities
With power being the most important resource for Bitcoin miners, miners are making an effort to integrate with their power demands and meet the environmental sustainability goals. Most miners, including our company, are transitioning to green Bitcoin mining by investing in and exploring alternative renewable energy sources.
Notably, there are different types of renewable energies, but all require appropriate infrastructure to leverage. At EZ Blockchain, we are exploiting wasted energy in oil fields by deploying the necessary infrastructure to the oil and gas fields to turn their wasted energy into productive use. This type of energy was initially flared due to the high cost of building the appropriate infrastructure to transport the gas from the oil fields.
We are able to tap the gas and use it on-site for Bitcoin mining, providing us with cheap energy that allows us to keep mining amid the energy crisis. We also invest in solar, wind, and nuclear energy. Instead of relying on the national grid, Bitcoin mining companies can invest in low-cost power facilities that can help them meet their energy requirements at a manageable cost.
4. Do More with Less
Bitcoin mining has faced a lot of criticism over its energy consumption. Environmentalists argue that its energy consumption levels are not sustainable and bad for the environment. Consequently, Bitcoin miners must look for alternative energy to meet their energy requirements. As a result, there is a scarcity situation when it comes to electricity for Bitcoin mining, and in a scarcity situation, doing more with less becomes a strategy.
For some companies, the only solution is to downscale their mining hardware to reduce their power consumption. However, fewer mining rigs means the company has a lower hash rate and will likely earn less from mining. Such miners can leverage the power of mining pools by pooling their remaining hardware with other small miners and starting mining together. Each miner contributes their proportion of their hash rate and then shares the block rewards in equitable proportions.
Also, miners can participate in demand response programs to sell power back to the grid during high demand. With demand response programs, miners can reduce their energy costs and boost revenues which can help meet some of their operational expenses or repay debts. Mining also becomes more profitable when companies mine during less expensive times.
Further, they can recapture the heat generated by the mining rigs and channel it to more applications that help minimize costs or create new revenue streams. For instance, Bitcoin mining companies are forging partnerships with companies that can effectively use the wasted heat energy.
5. Setting Miners at Low Power Mode
Bitcoin mining is more of a competition to crack a code and earn block rewards. Typically, there are different kinds of nodes, but the nodes responsible for verifying blocks are the ones involved in mining. Only one node can verify a transaction, and thousands of nodes maintain the network. As such, the nodes compete to become the first to verify transactions, and to have the best chances of cracking the code first, they need to run at maximum capacity.
However, due to the energy crisis and the overall crypto winter, running at full capacity can be quite challenging due to its cost implications. As such, miners can shift to operating in low power mode to save on the power consumption of their mining rigs.
When miners run in low power mode, the voltage flowing to the computer processor and components is reduced dynamically on run time to conserve electric voltage. It decreases the power consumption of the mining hardware over time, resulting in the system using less power and lower temperatures.
Your mining equipment’s overall power consumption and heat production are reduced significantly, as are your operational costs. It is a great way to boost profitability and survive a crypto winter. Additionally, the equipment runs more efficiently and lasts longer due to the little heat production, meaning more savings in terms of costs.
Summing It Up
Generally, predicting when a crypto winter could occur and how long it will last is challenging. Also, there are no parameters that determine when a crypto winter comes to an end. Only the crypto community comes to a consensus that the winter is over, depending on the general market conditions and trends. Still, they can distress investors and the general crypto enthusiast community.
For Bitcoin miners, learning how to survive amid declining values and negative sentiments is the safest place to be. Fortunately, there are strategies that miners can use and emerge on the other side of the crypto winter. With power as the major concern and expense for the industry, miners must be vertically integrated with their current and future energy requirements. At EZ Blockchain, we minimize our power use and exploit alternative and cheap energy. That way, we can meet the minimum operational expenses even with Bitcoin values plummeting and wait for the crypto spring in the future.