Bitcoin (BTC) Mining as a Strategy to Outperform BTC

Bitcoin miners are uniquely positioned to outperform spot BTC during bull cycles due to two main factors — mining profit margins and ASIC prices — being correlated to the BTC price.

Bitcoin mining presents a unique opportunity to consistently outpace BTC performance without relying heavily on speculative strategies. Here's how it works:

Bitcoin miners tend to outperform spot BTC during bull cycles. This is because two key factors — mining profit margins and ASIC prices — are correlated to the BTC price.

For example, if Bitcoin rises from $60,000 to $150,000, that's a 150% increase. In this scenario, here's how the monthly profitability for various ASICs would increase:

At Blockware, we refer to this phenomenon as the ‘Mining Profit Multiple.’ Many Bitcoin miners operate with a fixed energy cost, so revenue growth causes non-linear growth in net profit margins. This positions miners for exceptional benefits when the Bitcoin price rises.

ASIC prices, especially for the latest generation machines, have also been observed to move in tandem with the Bitcoin price during previous bull markets.

During the last cycle, the Antminer S19 started trading at ~$24/T in early 2020. By the top of the bull market in 2021, S19s were trading for more than $120/T. So during a time in which miners were seeing their profit margins increase exponentially, the value of their hardware was also keeping pace with the rising Bitcoin price.

Getting exposure to Bitcoin mining

A balanced portfolio of BTC-denominated assets might include a combination of spot Bitcoin, Bitcoin mining stocks, other BTC-exposed equities — such as MSTR and COIN — and ASICs.

When it comes to gaining exposure to Bitcoin mining, owning an ASIC has a few distinct advantages:

ASICs offer a direct and tangible way to participate in Bitcoin mining, unlike stocks or ETFs, which provide only indirect exposure.

ASICs can be purchased and deployed quickly, allowing miners to begin accumulating Bitcoin faster.

ASICs are a portable, self-contained mining unit, making them easy to integrate into any mining operation, whether large or small.

ASICs in the secondary market can be bought or sold at any time, providing unparalleled liquidity in the mining space.

Marketplace to address hosted mining challenges

Historically, one of the key challenges for hosted mining has been the long lead times associated with deploying mining equipment. Delays in receiving ASIC miners can be costly for miners and slow down Bitcoin accumulation.

Additionally, transparency issues and the lack of liquidity in the mining space have made it difficult for many investors to participate in hosted mining effectively.

Blockware Marketplace aims to solve these problems. It was launched by Blockware, a pioneer in mining-as-a-service and a prominent name in the global landscape of Bitcoin mining since 2017.

By offering zero lead time hosted mining, transparent, real-time analytics into ASIC uptime, and a liquid market for buying/selling ASICs, Blockware is revolutionizing the hosted mining industry.

This innovation eliminates the barriers that have traditionally made hosted mining a challenge, allowing miners to focus on what really matters: accumulating more Bitcoin than they could by simply buying it on the open market.

Institutional investors looking for bulk pricing on mining hardware with hosting services can contact the Blockware team.

Mitchell Askew is the Head Analyst at Blockware. He has been a full-time researcher since 2022, publishing hundreds of articles, podcasts, and threads covering Bitcoin and Bitcoin mining.