Coal Firm Mines Bitcoin, Stirs Environmental Debate

Alliance Resource Partners, a coal mining company trading on NASDAQ under the ticker ARLP, recently disclosed that it has been mining Bitcoin for over three years. This revelation came during its first-quarter earnings call, highlighting an unconventional venture into the crypto world by a traditional energy company.

Cary Marshall, Senior Vice President and Chief Financial Officer at Alliance, explained the move as an innovative way to utilize excess power generated at their mining operations. “It was just an opportunity that we saw due to the fact that we’ve got excess power at our mining operations,” Marshall stated, according to a transcript of the call.

In 2020 and 2021, during one of Bitcoin’s most significant price surges, Alliance purchased Bitcoin mining equipment to capitalize on this spare capacity. As of now, the Boulder, Colorado-based company boasts 425 BTC on its balance sheet, valued at approximately $25 million. This mining endeavour has coincided with the company’s market cap growth, now at $2.8 billion, which is up 6% over the last five trading days.

Alliance’s timeline in the Bitcoin space is comparable to that of MicroStrategy, known as the world’s largest Bitcoin holder, which made its first purchase in August 2020. Unlike MicroStrategy, however, Alliance generates its own Bitcoin through mining rather than purchasing on the open market.

This strategy, as detailed in Alliance’s first-quarter 8K report filed with the SEC, included $30.3 million worth of “digital assets” on its balance sheet, underlining the financial impact of its crypto activities.

The company’s approach to Bitcoin mining has been presented as an energy-efficient solution, utilizing “already paid for yet underutilized electricity load,” thereby not increasing coal consumption for additional Bitcoin production. This method of using excess electricity aligns with broader energy industry practices where Bitcoin mining serves as a flexible means of demand response.

Nishant Sharma, founder of Bitcoin mining research firm BlocksBridge, supports this integration. “Alliance Resources’ foray into bitcoin mining is a logical step, considering the process’ ability to harness underutilized electricity and its economic advantages,”. He anticipates that this could lead to more bitcoin mining projects by other energy firms.

However, the environmental implications remain contentious. Critics, including Daniel Batten, co-founder of CH4 Capital, express concerns about the potential negative perception this could cast on Bitcoin, especially among environmental advocates. “I suspect that nuance will be lost, given the low standard of analysis on Bitcoin’s environmental impact by many traditional media outlets to date,” Batten remarked.

While Alliance’s Bitcoin mining initiative demonstrates a creative use of excess energy, it also sparks a broader debate on the environmental impact of such practices within the cryptocurrency space.