Friday, 14 June 2024

SATO to make strides in Bitcoin mining towards halving

5 min read

By Foo Boon Ping

Strong financial performance and operational efficiency will allow SATO Technologies to scale up mining power over the next 12 to 24 months leading to the much-anticipated halving in 2024

SATO is a Quebec-based Bitcoin-mining company. It achieved $0.5 million in net income in the first quarter of 2023, relying on strategic acquisitions of Bitcoin-mining computers and rigs, and expanded its mining capacity without relying on external funding.

Romain Nouzareth, CEO of SATO Technologies, discussed Bitcoin’s performance, his strategies and the company’s success in a bear market.

He began by saying: “Efficient mining requires that your computer is on 24/7, 365 days a year, and that they can mine for a long time because it’s a long-term game. Pay back your miners as quickly as possible, and then lead to pure profit.”

He shared thecompany’s strategies, such as optimising operational efficiency, strategic hardware acquisitions, and infrastructure development. Access to low-cost electricity, which constitutes 80% of operational expenses, is crucial for success in this energy-hungry sector: “The recipe for success in Bitcoin mining is simple: cheap electricity, efficiency, cellspot, and the ability to buy your computers at the right price.” SATO benefits from Hydro-Joliette’s renewable energy source for stable and cost-effective electricity.

Halving effect

The company plans to increase mining power in the next 12 to 24 months to capitalise on the 2024 Bitcoin halving event. Nouzareth said: “The halving presents a significant opportunity for us.”

A Bitcoin halving is a programmed reduction in BTC creation. The Bitcoin protocol schedules it every 210,000 blocks, or four years. The block reward halving event reduces miners’ allocation of fresh Bitcoin, slowing fresh issuance. Bitcoin's halving supports a price increase based on supply and demand—prices rise when supply decreases and demand stays the same or grows. The scarcity impact of limited supply may raise Bitcoin prices if demand remains high.

Bitcoin price rises have regularly been correlated with halving events, with considerable upward momentum both before and after prior halvings. For example, during the 2012 halving, Bitcoin's price rose from around $12 to more over $200 in a single year.

Hold on for dear life

HODL (hold on for dear life) is a widely used term in the cryptocurrency community referring to holding on to cryptocurrency investments rather than selling them, even during periods of price volatility. It suggests that investors should hold on to their assets regardless of short-term price fluctuations, in the belief that value will increase over time.

Nouzareth explained: “We have an opportunistic approach with our HODL-ing strategy. We want to HODL but we want to deploy more capital to be able to grow.”

SATO is exploring innovative projects related to Bitcoin technology. The company sees opportunities in new blockchain and cryptocurrency avenues. It plans to expand by acquiring Bitcoin miners from around the world, enabling access to new markets and technologies.

Nouzareth also discussed the successful strategies of prominent Bitcoin miners, such as listing on stock exchanges. Sato is listed on the Toronto Stock Exchange (TSX) Venture Exchange.Nouzareth pointed out that SATO’s stocks have increased in value by 225% since January 2023.

Companies like Hive, Hut 8, Bitfarms, Marathon, and Riot made dual listings on the TSX and NASDAQ stock exchanges, gaining access to broader capital markets and increasing visibility, while mergers with other industry players can widen scale and bump up market position.

The introduction of ordinals is a recent innovation that is crucial to SATO’s goal, opening new possibilities for non-fungible tokens on the Bitcoin network. He said ordinals are on the rise and serve as a distinctive NFT for Bitcoin.

He also expressed interest in central bank digital currencies and stressed that Bitcoin is not in competition with the dollar. Bitcoin, with a market cap of $1 trillion or less, while gold has a valuation of $10 trillion, according to Nouzareth.

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