Monday Mining Metrics: Marathon Mimics MicroStrategy
Bitcoin Mining Update - 8/12/2024
Marathon Digital Adopts MicroStrategy Corporate Bitcoin Playbook
Taking a page directly from MicroStrategy, $MARA announced a private offering of $250 million in convertible notes. These are seven-year notes maturing on September 1st, 2031, convertible into cash or shares of $MARA common stock (at Marathon’s election).
The advantage of convertible notes over traditional debt financing is that $MARA will be able to acquire a much lower interest rate than they otherwise would due to the fact that the notes may be converted into equity.
Marathon plans to use these funds to “acquire additional bitcoin and for general corporate purposes, which may include working capital, strategic acquisitions, expansion of existing assets, and repayment of debt and other outstanding obligations.” This financing is much needed after $MARA’s reported net income loss of nearly $200 million in Q2.
BTC Bounce Back
Last Monday’s newsletter was published in the midst of a BTC price drop to $49,000. Market participants and Bitcoin miners are in a much different position today with BTC posted up at $60,000. The volatility of this market is unmatched.
Chart Source: @BitcoinPierre
On-Chain Transaction Fees
Miners aren’t getting much help from on-chain transaction fees at the moment. Total miner revenue from fees is ~1.9% - the lowest level since Q1 2023.
A lack of on-chain activity and fees to miners shows that we are still very much in the early innings of the bull market. Bull market tops are typically denoted by miners consistently earning 10 to 20% of their revenue from fees.
Fee revenue is a major dark horse for mining profitability this cycle. The ordinal craze of 2023 and the 2024 halving illustrated how a marginal change in demand for on-chain settlement can have a significant boost in transaction fee rates. Given the scarce amount of transactions that can be included in each Bitcoin block, frenzies of demand result in much higher fees as users attempt to outbid each other for block space.
Hashprice (Miner Revenue per Terahash)
After dipping to $0.039/Th/Day, Hashprice is back up to a manageable $0.042. This is due to move marginally higher after the next difficulty adjustment, which is projected to occur on Wednesday, and drop mining difficulty by ~4%.
But Bitcoin miners aren’t positioning themselves for marginal changes in hashprice. Bitcoin miners are positioning themselves for the explosive moves upward that happen during bull markets. During each of the past two bull markets, hashprice has increased by more than 300% on a year-over-year basis. These are the months when Bitcoin miners feast - you don’t want to miss them.
Mining Profitability by ASIC Type
Here’s a table breaking down the profitability of various ASICs based on the current hashprice…
And here’s a table breaking down the profitability of those same ASICs in the event that hashprice ends up 300% higher next year - as it has during previous bull markets. As you can see, the difference is night and day.
Bitcoin miners operate with a fixed energy cost. Which means that a rise in revenue does not increase operational costs as is customary with many business models. The net result is that a linear increase in hashprice results in an exponential increase in mining profit margins.
It’s important to note: this is a simple model and past performance is not indicative of future results. Moreover, a 300% increase in hashprice means that ASIC prices will almost certainly increase as well. This is one of the primary reasons why it is important to acquire ASICs now, rather than wait for hashprice / the Bitcoin price to make a big move.
“Buy the dip” applies not just to spot Bitcoin, but to Bitcoin mining too.
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Blockware Direct ASIC Pricing with Hosting
The Bitcoin price has dipped - and we’ve dropped our prices. The best time to deploy capital is now.
For those seeking to purchase ASICs in bulk (with or without hosting), contact sales@blockwaresolutions.com or reach out here.
Contact sales@blockwaresolutions.com or reach out here.
All content is for informational purposes only. This Blockware Intelligence Newsletter is of general nature and does consider or address any individual circumstances and is not investment advice, nor should it be construed in any way as tax, accounting, legal, business, financial or regulatory advice. You should seek independent legal and financial advice, including advice as to tax consequences, before making any investment decision.