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4 days ago
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In Bitcoin mining, survival comes down to margins and margins come down to energy costs. While most miners race to secure ever-cheaper electricity contracts, Gridless takes a different route: we mine exclusively on stranded power, using a revenue share model that eliminates direct energy costs entirely. This gives us a structural advantage in volatile markets, allowing us to stay online when others shut down, and to profit even at historically low hashprices.
One of the unique features of the Gridless model is that we only work with stranded energy. This means that we only use energy that has absolutely no other buyer. We aren’t competing with industry or AI or any party that would be willing to pay more for the electricity; it’s us or nothing. This is often a hard thing for energy companies to wrap their heads around in the early stages of our discussions with them. They tend to think that their energy has a certain value (usually based upon their LCOE calculations) but the truth is that if we don’t monetise it then no one will and they will realise zero revenue. Unlike energy sources that require fuel (e.g. coal, nat gas, diesel), renewable energy producers (particularly hydro) either generate with the water flow or let the water flow on down the river. This means that the true marginal cost of production per kWh is very low – usually less than $0.005 (½ a US cent) per kWh – so the real cost for the energy company is effectively zero. This is especially true since their only real costs are the humans operating the site and the humans will be there whether all the energy is sold or not.
This situation gives Gridless the ability to provide a compelling value proposition to the energy company to monetise all of their stranded energy. We cover the costs of deploying the equipment, we handle the setup and operations of our data centre, and we make sure that we provide real-time demand response so that only the stranded energy is used by our equipment. If another energy customer turns on a water pump or maize mill then we instantly reduce our load to ensure that the higher paying customer gets the electricity. In exchange for this flexibility, we only pay the energy company based upon a revenue share. We mine bitcoin with their stranded power and then we give them 30% of the revenue we generate from our operation. Normally, we pay this directly to their own bitcoin wallet so they can manage it as they see fit.
What this does for us is it gives us a huge advantage during uncertain hashprice markets. While a sudden drop in hashprice does have an impact on our revenue we never have to shut down due to negative operational economics – because we don’t have a direct energy cost. We can keep mining profitably even when other miners have to turn off their machines. To illustrate this, the chart below shows the gross margin for miners based upon various hashprices at a range of electricity prices.
When we look at the hashprice range over the last 12 months, we see that any miner wanting to maintain at least 50% gross margin needs to be paying less than $0.03 per kWh. Based upon financial reports, the average for public miners is around $0.045/kWh meaning that they have been wandering in the sub 50% gross margin range for most of the last year. While they aren’t having to turn off, it does put a squeeze on their overall profitability.
Since I know someone will ask, the mining efficiency of the above chart is 28J/T. This is the weighted average network efficiency from the April 2025 Cambridge University Digital Mining Report. Are there miners operating more efficient fleets? Of course! These more efficient machines, however, require a big reinvestment in capital but the opportunity does exist to get higher margins even in the current hashprice environment with higher energy costs if you want to buy newer and better machines.
To that end, I keep a working spreadsheet of the latest prices for various machines (sorry Bitmain fan boys, we mine in MicroBT focused Africa). This allows me to quickly see what the all in margin per kWh is for various models on the market. It takes into account a 3 year depreciation and I can evaluate machines on both a fixed energy (this chart is $0.045) and revenue share basis. What you’ll notice is that a 28 J/T M30s++ has nearly the same gross margin per kWh at $50/PH hashprice as the much more expensive and efficient M60s (18 J/T). It is also clear that all machines really take a hit at lower hashprices when having to pay directly for energy.
The opposite is true for a revenue share based energy agreement. Even an older, less efficient machine like the M30s is still pumping out profitable kWh’s at record low hashprices. In fact, the dirt-cheap M30s on a revenue share model at $40/PH beats almost everything on the fixed energy model at $50/PH. What also becomes apparent in the revenue share model is that the last generation mid-tier machines like the M30s++ are some of the best bang for the buck even with lower hashprices. They are cheap and reasonably efficient and therefore a perfect fit for rev-share mining.
The one downside to revenue share energy contracts is that you do end up giving up some of the upside when hashprice decides to take a trip into the stratosphere. This is somewhat visible in the charts but better illustrated by the fact that on a 30% revenue share at a $70 hashprice, we would actually pay more for electricity than the $0.045 average of the pubco miners. If we ever make it back to $100/PH then we would be paying nearly $0.07/kWh. This higher cost of energy is offset by the fact that we are still making great money on our operation but it does dampen the idea of massive profit reaping during the next hashprice bull run.
While revenue share contracts are not likely to be on offer for most miners around the world, Gridless is fortunate to be mining in Africa where we have lots of pockets of stranded power. This gives us an ability to make more efficient capital decisions on the miners we buy and to keep mining when other miners are feeling the economic strain of low hashprices. While we certainly may give up a little bit of cream during the next mining boom, I’m not convinced that we will ever see another mining boom. Since 2023 the hashprice (and by extension $/kWh revenue) has largely decoupled from the bitcoin price action (see chart below) and I expect that we will mostly stay within this $40-$60/PH range for the foreseeable future. That’s fine by us. We are happy for the combination of hashprice and energy price pressure to keep filtering out inefficient miners. That will free up some hashrate on the network and allow those of us pushing bitcoin decentralisation to the far reaches of the known world to make a bit more money.
