But surely there's some reality where only buying $1000 BTC and just setting fire to another $500 is somehow more profitable, right?
If you agree to purchase $1500/mo from the power company for 12 months, and they’re going to bill you that no matter what, then losing $500/mo (and keeping BTC that’s likely to increase in value eventually) is preferable to shutting down and losing $1500/mo.