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211,000,000,000,000,000,000 hashes per second — that’s how fast the Bitcoin (CRYPTO: BTC) network is processing information at this moment according to Blockchain.com.
This mind-bogglingly large number — that’s 211 with 18 zeros after it — is a testament to the incredibly competitive nature of the Bitcoin mining industry. Since July 2021, Bitcoin’s total hash rate has nearly tripled. Looking back, you’ll find the total hash rate has risen nearly every year since Bitcoin’s inception.
For operators like Bluesky Digital Assets Corp. (CNSX: BTC) (OTC: BTCWF), Marathon Digital Holdings Inc. (NASDAQ: MARA), Riot Blockchain Inc. (NASDAQ: RIOT) and Hut 8 Mining Corp. (TSE: HUT), this metric demands a need for competitive advantage — something to tell the world, “I will be successful despite the rising difficulty in my field.”
The need for this “special something” is arguably of paramount importance now, as the cryptocurrency market experiences a slump and investors become more risk-averse.
Here are four trends that may arise as a result of the pursuit of a competitive advantage.
Investor Scrutiny As the cryptocurrency market experiences a drawdown, investors could be less likely to lend their capital to operators and could be warier about which operators they choose to fund.
It’s likely no longer a competitive advantage to just be mining cryptocurrency or have plans to order future machines. Investors may need to see their chosen crypto miners develop a tangible edge over competitors.
“Investors will likely dig deeper into the publicly traded companies’ growth plans and ask if they have paid for the mining computers that they said they would. If they haven't, the question becomes whether these miners have enough cash to pay for the machines,” GEM Mining CEO John Warren said.
“If they don’t, they will have to raise money by issuing more equity — and diluting their shareholders’ stakes.”
Share Dilution And Large-Debt Accumulation To stay profitable in a hotly competitive market, miners may need to find creative ways to fund their growth plans. Investors might view companies that choose to raise capital via issuing stock, thereby diluting share value, or through high debt accumulation in a less favorable light.
The accumulation of investor interest through direct progress — whether that be expansion plans, a new facility or new machine purchases — will likely be viewed in a more positive light as the company demonstrates its growth through a tangible competitive advantage.
Product Differentiation In light of these two trends, mining operators could flock to product differentiation as a main way to create a tangible advantage over competitors.
Riley Financial Inc. analyst Lucas Pipes told CoinDesk he expects a “greater differentiation” this year among crypto miners as they try to reach the targets in their business plans and pursue further exposure in adjacent markets. Pipes said miners that vertically integrate, or own their own infrastructure for power and hosting mining machines, are “ideally positioned for this evolution.”
Similar to these market giants, Stronghold Digital Mining Inc. (NASDAQ: SDIG) has undergone vertical integrations, using its power for both digital mining and open-market electricity sales. Moreover, Hut 8 uses its data center business for both digital asset mining and cloud computing.
Finally, Bluesky’s digital mining operations are paired with a reinvestment strategy that funds artificial intelligence projects and with a blockchain-intelligence service that provides insight for blockchain newcomers, possibly achieving a truly differentiated product line.
Leveraging Mining Machines According to CoinDesk, Bitcoin miner CleanSpark Inc. (NASDAQ: CLSK) said during a February earnings call that given the company has top-of-the-line, latest-generation, application-specific integrated circuit (ASIC) mining machines, it will use them as leverage to raise capital.
BlueSky’s recent partnerships with Monbanc for a $1 million purchase of 1 megawatt Bitmain Antbox Liquid Cooling System, which will house a combined 195 S19 Pro+ Hyd (S19 Hydro) ASIC miners that are hydro/liquid-cooled, may put leveraging well within its world of possibilities as well.
These new moves mean the company will likely increase its Bitcoin mining capabilities by a minimum of 18.5 petahash per second (PH/s), which would amount to approximately $89,251 (CA$114,380) per month in additional gross revenue based on BTC being priced at CA$45,000 per BTC and the minimum PH/s achieved.
The Future Of Cryptocurrency? While no one can say for sure how the cryptocurrency space will look, given the incredible rise in competition and the cryptocurrency market’s weakness, one could expect each of these trends to potentially form.
Cryptocurrency volumes have decreased significantly since the 2021 boom, indicating rising investor scrutiny, while operators like Bluesky and Stronghold Mining have both shown signs of product differentiation and leveraging mining machines.
One thing is arguably clear: “I’m mining cryptocurrency” is no longer a unique selling point.
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