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Alliance Resource Partners’ Venture into Bitcoin Mining
Alliance Resource Partners (ARLP), a prominent US-based coal mining company, recently made headlines by delving into the realm of Bitcoin mining. The company reported a successful mining operation that resulted in the acquisition of 425 Bitcoin, valued at $30 million. This unconventional move stemmed from ARLP’s utilization of excess energy derived from its existing facilities, as disclosed during its first-quarter earnings call.
The Environmental Debate
Despite the financial gains associated with this venture, the decision has sparked a debate, particularly within the crypto environmentalist community. Daniel Batten, a vocal advocate for sustainable practices, expressed concerns regarding ARLP’s foray into Bitcoin mining. Batten pointed out that such a move could potentially undermine the ongoing efforts to promote a positive “environmental narrative” associated with Bitcoin. As per Batten’s tweet:
“Bitcoin mining companies have moved off using coal. But I guess you can’t stop coal mining companies mining Bitcoin. Either way, in terms of changing the environmental narrative around bitcoin, this doesn’t help.”
The Transition Towards Green Energy
Over the past few years, there has been a noticeable shift in the Bitcoin mining sector towards adopting more sustainable practices. More than 50% of BTC mining companies have transitioned to using renewable energy sources, as highlighted in a Forbes article.
ARLP’s Bitcoin Mining Strategy
ARLP’s Chief Financial Officer, Cary Marshall, expounded on the company’s Bitcoin mining strategy. The initiative commenced in 2020 through a pilot project that harnessed surplus power from the mining operations at the River View mine. Marshall elucidated during an earnings call:
“We ended up with about 425 Bitcoin at quarter-end in terms of what we own. We’re not actually out there buying Bitcoin or anything of that nature. We’re mining the Bitcoin associated with these miners that we have.”
Furthermore, Marshall disclosed that to maintain financial stability, ARLP periodically liquidates a portion of its Bitcoin holdings to cover operational expenses. During the first quarter of the year, the company mined approximately 69 BTC, with 25% being sold to meet overhead costs.
CEO Joe Craft emphasized ARLP’s cautious approach to Bitcoin mining by limiting exposure to the digital asset. The company offsets costs by selling acquired assets and leases surplus capacity to other miners. ARLP maximizes its data center infrastructure to leverage low energy expenses.
Looking ahead, ARLP aims to mine around 190 BTC by the year-end. Marshall projected:
“Our projections would show somewhere between 175 to 190 or so Bitcoin for the year in total that we would mine. We would monetize some of that to cover our operating expenses. So, our net would probably be around 60% of that number.”
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