A summary of how Saxet Infrastructure Group is building a 300-megawatt bitcoin mining hosting site in Texas that offers a novel energy strategy for its customers.
Compute North, one of the largest data center hosting services for cryptocurrency miners and blockchain companies, filed for Chapter 11 bankruptcy in Texas in September 2022.
The company blamed its financial woes on the troubled market for digital assets, the increasing cost of electricity, and the time lag between spending to build data centers and getting revenue from those facilities.
However, a new venture has emerged from Compute North’s bankruptcy: Saxet Infrastructure Group. The energy and bitcoin mining veterans are developing a 300-megawatt hosting site in Corpus Christi, Texas, that will give customers an unusual option for managing their electricity costs.
A flexible power management strategy
The site will be connected to the grid and co-located with an additional 300 MW battery storage facility. Customers can form their power management strategy and decide if and how they participate in demand response programs.
Demand response programs are incentives grid operators or utilities provide to lower or shift electricity consumption during peak times or emergencies. By doing so, customers can lower their energy bills and help balance the grid.
Saxet’s all-in hosting fee won’t be fixed. Instead, the firm said that Saxet would pass variable energy costs onto its customers and charge a fixed management fee lower than that of many of its competitors.
“In a fixed-price hosting market, as we’ve seen the market shake out, one party usually ends up losing,” either the customer is signing up for a fixed price that turns out to be too high, or the price is too low. So the infrastructure partner hosting partner is at risk, said Ro Shirole, who left retail-facing hosting firm Compass Mining to join Saxet as its Chief Commercial Officer.
A win-win solution for miners and the grid
Electricity is usually miners’ most significant operating expense. Many hosting contracts signed during the 2021 bull market had a fixed price, including an energy and management fee.
Those fees became unsustainable for hosting firms during the energy crisis of 2022.
Saxet aims to provide a win-win solution for miners and the grid by offering a flexible and transparent pricing model. Miners can benefit from lower energy costs and higher profits, while the grid can benefit from more stability and reliability.
Saxet is not the only firm exploring innovative ways to integrate Bitcoin mining with the grid. Other companies, such as Layer1 Technologies, Great American Mining, and Crusoe Energy Systems, have also been experimenting with using excess or stranded energy sources for mining or providing grid services.
However, Saxet claims to have the edge over its competitors by having a large-scale site with battery storage and grid connections. The firm expects to start operations in Q2 2023 and has already secured some customers.
Saxet’s vision is to create a sustainable and profitable Bitcoin mining ecosystem to support the industry’s growth and contribute to the energy transition.
