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2022 has been an exceptionally rough year for the crypto market, and the last few months of Bitcoin’s (BTC) price action could be a sign that bears aren’t even close to being ready to let up. Crumbling crypto prices also equate to diminishing profits for Bitcoin miners and this week’s regulatory action by the United States lawmakers requesting energy consumption data from four major BTC mining companies is bound to exert a bit more pressure on an already fragile situation.

Despite the increasingly bearish climate, most of the Bitcoin miners Cointelegraph has spoken to are incredibly optimistic about Bitcoin’s short and long-term price prospects.

Chiming in with similar sentiments, Canaan senior vice president Edward Lu spoke with Cointelegraph head of markets Ray Salmond about how industrial Bitcoin miners have matured and the new synergies they have created with the oil and gas and big energy sector in the United States and the Middle East.

Ray Salmond: Edward, what’s happening in the mining industry right now, from your point of view?

Edward Lu: Wow. This is a really big question. A lot of things are happening in this industry, especially in recent months. If you’re looking at Bitcoin dropping a little bit and coming back to stabilize in terms of days, it looks like the cycle is shorter than what we expect. I think by the end of the year, the price will be a bit better, going up a little bit. In the mining industry, you can see a lot of activities happening.

I remember that before last year, China and the U.S. market were the two major markets for mining, a mining’s generating hash rates, and then the Chinese miners moved out of the country to Kazakhstan in the first phase. And then starting from the beginning of this year, we see a lot of movements toward the U.S. market, and obviously, we see a lot of activities happening where you are in the state of Texas.

The availability of cheaper electricity, comparatively speaking, and also friendly policies and as well as engineers. There are decent, well-trained engineers in those industries. So really, a lot of things are happening in the mining industries.

RS: Electricity prices are soaring in the European Union and the United States, and at the same time, Bitcoin continues to trade near its 2018 all-time high. ASIC prices are also down roughly 70%, and it appears that for some miners, the cost of mining outweighs profitability. What are some of the capital expenditures (CAPEX) and operational expenses (OPEX) considerations that industrial miners have in this current climate?

EL: Well, yes. But if you look in the long term, the mining industry is a healthy and profitable business. Even if you look at these days in the short interim, sure, there is a small drop. The Bitcoin price and the energy price are increasing. But again, if you’re looking at CAPEX, OPEX or the profitability of the mining industry, there are many things combined together.

Of course, number one is your machine cost. Number two is your energy cost. Number three is your infrastructure cost. Number four is your OPEX for daily maintenance. But to the best of my knowledge, if you’re looking at today’s machine efficiency and today’s market, the average price of energy, and the average price of your OPEX, then Bitcoin price needs to not drop below $15,000 for miners to continue making a profit.

RS: The next Bitcoin halving is in about 590 days. What impact does this have on the efficiency of ASICs in the range of 110 TH/s to 140 TH/s? Can you speak about the reward for mining becoming smaller, yet the energy required to produce 1 BTC being higher? How could this dynamic change as production costs rise?

EL: The machines will keep improving. We’ll be more efficient when the technology develops. Of course, Bitcoin has been designed in a way that every four years, that reward is halved so that it becomes less and less — but it doesn’t mean that your profit will become less and less. If you look at the history, each halving happened every four years, and the business is still growing healthily. Mining industries keep growing. The profit depends, as I said earlier, on a lot of things. Of course, your machine costs, your infrastructure cost, your OPEX, CAPEX and also your energy costs. And of course, the last thing — which is pretty important — is the Bitcoin price. So, there are many things together. I don’t see this trend becoming smaller and smaller. I think this industry will still keep on going as well as we have gone through in the past. It’s a healthy, profitable business for mining industries.

RS: Is it incorrect to assume that with each having, ASICs must become more powerful and therefore use more power?

EL: No. It’s not right, to be honest. If you look at the machines and technology, even if it is going to have 100 TH/s, 120 TH/s or 140 TH/s, the consumption power versus the terahash — which is the efficiency we call per joule per TH/s — is becoming less and less.

If you’re looking at the history of previous machines, the efficiency is over 60 or 65 joules, and now it goes down today. If you look at the market, the average efficiency is about 30 joules. Then we see by the end of this year, every company, the three key players, are going to have machines or are already going to market that they have 25 joules and even below this figure. So, the machines are more efficient, and they consume less power versus TH/s.

RS: There’s growing synergy between traditional big energy and Bitcoin mining, such as capturing flared gas to power generators, solar mining and even hydroelectric-powered mining. Will industrial Bitcoin mining be the linchpin that actually catalyzes mass adoption of Bitcoin and brings it into everyone’s daily life?

EL: I started in this industry a few years ago, and when we started this industry, it was a lot of Chinese entrepreneurs who were mining. They were all individual entrepreneurs with passion who believed in this industry. I emphasize that an individual or passionate entrepreneur in China started that, and they looked for short-term interest. They looked for short-term money — you know, your typical Chinese individual entrepreneur.

But slowly, when I look at my partners, my Canaan partners, the profiles have been changing, or let’s say evolving, over the last three years. From the individual Chinese entrepreneur to now, more and more, I see that our long-term partners of Canaan and Avalon are traditional energy companies, institutional investors, financial-institutional clients and traditional financial investors. This kind of change or evolution really changed the picture of the mining industry and the nature of the mining industry.

As you mentioned, those energy companies step in because of the ability to use wasted energy and surplus daytime and nighttime energy. And this helps them to use these wasted energies and convert them into a storable value. For me, Bitcoin is a value that you can store. When you are wasting those energies, they cannot be stored in a storable way.

So, this is the perspective of the energy company. And of course, this kind of evolution and increased involvement — plus the change of the players in the mining industries — I think evolved the whole industry.

It becomes industrially scaled, and it becomes more professional throughout the mining business. It also will help with the long-term outlook of this business. People are more and more from institutional, traditional and energy companies — they work for the long term. So for me, this changes the picture. This gives us more professionalism, transparency and long-term goals in the mining industry.

Related: Will the Bitcoin mining industry collapse? Analysts explain why crisis is really opportunity

RS: I personally think that Bitcoin is a legitimate asset. There are always a number of investment theses that explain why a person should have exposure to Bitcoin. You’ve said Bitcoin has gone from a grassroots or a community-led entrepreneurial hobby for making short-term gains to an industrialized arm of the energy sector. Do you think that this legitimization by the energy sector will lead to the mass adoption of Bitcoin as an asset from an investment point of view?

EL: We are strong believers in Bitcoin, of course. We’ve been in this industry for a long time, and Canaan is one of the earliest companies. In fact, our CEO is the inventor of the ASIC miner machines. Of course we are strong believers. Like you said, you believe that it is an asset. It is, for me, an asset. Again, if you’re looking at what I say, the profile of the mining industry and its entrepreneurs is changing. But if you’re looking at Bitcoin itself — when we started this industry, it was more or less that the Bitcoin was in the hands of those individual entrepreneurs. And since the past three years, as I mentioned, the traditional financial institutions and companies have been in this industry. So, that really changes Bitcoin, the ownership and the profile of the ownership.

That’s why in recent years, Bitcoin is more and more correlated with traditional financial market fluctuations. The volatility of Bitcoin is more or less coherent with the current traditional market versus the previous one. So, this is really a change for me for the positive, that Bitcoin is one of the traditional financial assets. It is an asset and is becoming more and more traditional now — that’s what I mean.

RS: Many long-term investors, retail investors and small miners who used to mine at home as a hobby or for profit fear that the industrialization of mining and Wall Street’s move into cryptocurrencies is going to damage what Bitcoin stands for and dilute the movement. Do you believe the Bitcoin revolution is being co-opted?

EL: Yes, well, you’re right. I mean, first of all, we believe in Bitcoin. We believe in decentralization as well. Since we haven’t discussed in detail the technologies, when I mentioned our Canaan Avalon, when we produce our machines, the normal air cooling system consumes power less than 3,500 watts.

We are not like the other companies that develop containers for order. The big companies produce machines that consume over 6,500 watts. These companies are developing machines that are not for retail miners. We are sticking to the start of the culture, and decentralization is at its core. If you’re looking at our machines, we are focusing on individual machines. Each machine must consume less than 3,500 watts, which means that every individual at home can mine in their house, garage or in their kitchen. You buy one or 10. That depends on your cost of electricity and such, but the machine is decentralized. You don’t necessarily have to be mining with big companies assembling in a huge mining site or under a huge infrastructure of containers.

RS: Is there anything that you want to say to the world? Do you have any personal thoughts you’d like to share?

EL: I think anybody in this industry knows that Bitcoin has a cycle, right? Sometimes the cycle lasts two to three years, sometimes three to six months, or sometimes longer. This time, I believe it will be shorter. Of course, nobody can predict it, but I have more confidence that by the end of the year, the price will be going up slowly. And in the long term, I strongly believe that Bitcoin will have much better growth in terms of price.

This is one thing that I want to tell the industry: Let’s be confident in this industry because this industry has really evolved in terms of mining machine technologies, in terms of infrastructure build-ups, by using green energies, and in terms of a good ratio mix of individual and institutional players. And again, in terms of Bitcoin being ownership, as I mentioned, even you believe it’s a sort of financial asset now.

So, everything for me is growing or evolving toward positive long-term things. I do have strong confidence, and I do want to convey this kind of confidence to people and to the readers of Cointelegraph.

I’m Chinese, and in my language, the Chinese character for crisis is two characters composed in one word, “crisis.” But in fact, you can separate the two characters. One is crisis, and the other is opportunity. In Chinese, we say 危机 (pronounced wei ji). This moment is the moment of 危机 (wei ji). The first character (危) means danger, or crisis, and the second character (机) means opportunity. The Chinese always see crisis in two parts. One is, of course, a crisis, and you have to be alert. You have to be serious. You have to prepare yourself to anticipate this crisis. But we believe in more opportunities during the crisis. There are a lot of opportunities. So, the Chinese word “危机” is always crisis and opportunity.

I do believe this moment is more opportunity than crisis — more opportunities for miners, miner manufacturers, infrastructure builders, energy builders and even traditional financial investors. For me, I look at this time as a time for more opportunities.

This interview has been condensed and edited for greater clarity.