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Three mining risk trends from an insurer
Evertas Chief Underwriting Officer Thomas Shewchuck on the risks and efficiencies of wind and solar sites, new ASIC fleets and expansion outside the US.
Thomas Shewchuck is the Chief Underwriting Officer at Evertas, and at Mining Disrupt Miami, held June 24 to 26, 2024, he gave a keynote on three trends his insurance firm was seeing in Bitcoin mining. Bitcoin was trading at $61,272 when the talk was recorded. Today it stands at $82,531.
Evertas, he explained, is the first insurance company solely focused on the crypto industry. In his words, "We don't have any other industries that we support." The firm was founded by crypto natives, Shewchuck mines Bitcoin himself, and as of the end of 2023 Evertas insured about 25% of the Bitcoin network.
The first trend was the move to solar and wind power at mining sites. The core risk is intermittency. As he put it, "If the wind doesn't blow, the sun doesn't shine, you're not mining, right?" These sites also tend to sit in remote parts of the US, far from a fire department that may not be manned around the clock. His advice was to ask an insurance broker for peril scoring, so an operator knows the odds of a tornado or a severe wind event in a given year, and to review the disaster recovery plan before committing a fleet.
The second trend was upgrading fleets to newer ASICs like the S21 and S19K Pro. The machines are more efficient, but they are new. He said, "You have a smaller sample size of operating time, so you don't necessarily know if they're going to function as well as the manufacturer's specs suggest." He recommended talking to repair shops about what they are seeing, and tracking how machine values move over time, since older generations lose value when new models arrive.
The third trend, which he called probably the biggest, was expansion outside the US into the Nordic countries and South America, especially Paraguay, Iceland and Finland. Lower power costs and cheaper labor are the draw, but he warned of geopolitical risk, noting, "I don't think it's a secret that bribery is more of a thing down there than it is here." There are also unfamiliar perils, from mudslides and flooding in Paraguay to volcanic activity in Iceland. On that last point he said, "It's not as if lava is really going to stop at any given point." His checklist was to do thorough KYC and AML on partners, understand who owns the power substation, build a local disaster recovery plan, and comply with local law.
The full story is on Mining Disrupt at miningdisrupt dot com, and many more like it play around the clock on Bitcoin Radio.