Bitminers Need to Position Themselves as a Business to Appeal to Oregonians, Look Past Bitcoin Craze
PORTLAND, OR – Bitcoin mining and its underlying technology, blockchain, are more than just in vogue at the moment. Some may say we are entering the era of blockchain. However, that doesn’t mean that everyone in the industry understands what it takes to turn a profit from blockchain, or that every market is suitable for it.
At CapRE’s Portland Data Center Summit last week, Robert McCullough, Principal at McCullough Research provided some opening remarks for the panel Blockchain, Cryptocurrency and Bitcoin: What Are They and How Do They Impact Data Center Design & Construction? In those remarks, he also provided some context for Portlanders as to what to expect and how to make the most of the blockchain boom.
“I have good news for you,” shared McCullough. “The cheapest electricity in the world is in Portland, Oregon. It’s known as the Mid-Columbia market. Well the power is at Mid-Columbia but the market is right here [in Portland]. There are more utilities, brokers, trading floors, government agencies, consultant and public interest groups here than anywhere else”
McCullough then shared that papers from all over the world are broadcasting this factoid to bitcoin prospectors — except for one key publication. “The Oregonian wants no part of it,” revealed McCullough, hinting at Oregon’s infamous resistance toward energy-heavy industries. “They want us all to leave.”
“So here is the bottom line,” he continued. “Blockchains are accounting. If you want to actually situate an installation in Upper Umpqua, you’d say I’m an accountant. I do blockchains. I’m going to be here forever. The whole bitcoin thing will crash once we reach 21 million, but we’re going to do service fees and we’ll be here cranking ‘em out until your grandparents are at a dead old age. The one thing that you do not want to do is say I’m a flashy person, I like multi-level marketing, I drive fast cars, I want fast women. That entire speech will not cut it.”
In short, the industry has got the wrong people for the wrong products. “The right answer is that the blockchains need to position themselves as a business,” he advised. “They may or may not succeed. Most of us are not convinced yet that that will be economically viable. But we don’t care. It’s a logical approach. There’s nothing wrong with the theory. On the Bitcoin issue, the last thing that we want to do is go pose as a utility load. You’re not a utility load. You’re a speculative load. Do we have a product for you? Yes. It’s known as the Mid-Columbia Spot Market.”
Next, he turned to the crowd for some participation, asking if anyone knew the price of off-peak power in Mid-Columbia for the rest of the month. “What’s the price?” he piqued, before taking some guesses. “It’s minus! It’s less than zero. They pay you to take it. You can buy that as a foreign contractor. This is a different world. That is a Bitcoin product. What you want to do is figure out that the two things are not the same, and then position them correctly. “
“That’s the end of the story. No one else has a clue what anyone else is talking about,” he concluded, ending his remarks on a light note. “But there are different energy products that fit much better. And the last thing, is that if you have a lot of extra money, we have a lot of extra staff. So bring them in.”
Robert McCullough is Principal of McCullough Research in Portland, OR, and has been in business for twenty five years advising governments, utilities, and aboriginal groups on energy, metals, paper, and chemical issues. He has testified repeatedly in state, federal, and provincial courts as well as before Congress and regulatory bodies. Before starting McCullough Research, Mr. McCullough was an officer at Portland General Corporation where he had responsibilities in finance, power marketing, and rate setting.