Happy 338-days A.H. everyone.
There are massive arbitrage opportunities in the mining industry right now. Buy an ASIC for $10k and it gets valued at $150k in the public markets. Build an MW for $200k and sell it for millions.
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Rig Price Index
New-generation equipment increased 3% during the period and 7% across all efficiency classes. We are now seeing some rigs selling at over $140/TH, in stock.
There is a widening gap between the immediately available broker prices and the future manufacturer prices. For example, last week Bitmain was selling the S19J Pro August batch at around $70/TH. These opportunities can only be taken in bulk.
Mining revenue has increased 6% on a USD basis since the last update, despite a 6% increase in difficulty at the beginning of the period. Stronger transaction fees (12% of mining revenue) and a 6% increase in Bitcoin price helped out. Hashrate continues to climb to 168 EH, with an expected 1.5% increase in difficulty this afternoon.
Riot Acquires Whinstone
- It wasn’t too long ago that Northern Data made news by merging with Whinstone. The immediate value add was 300 MW of available capacity and a GW expected in Q4 2020. The facility already had a couple of large customers locked in for hosting. Fast forward two years and now Northern is selling the site to Riot.
- For Northern Data, this seems to be a good deal, they were able to make a handsome return on their initial investment. And they still get exposure to the upside of the space through a 12% stake in Riot.
- For Riot, this can also be seen as a good move for a couple of reasons. The first is their high share price, making a stock deal cheaper for them to do. Secondly, Riot, along with many others like Marathon, Bitfarms, etc have ordered an insane amount of hardware. The short to mid-term bottleneck for these companies is not going to be ASICs, it’s going to be power.
- The M&A space is heating up with Luxxfolio acquiring Westblock and many other sites currently for sale.
ETH Turns to Flashbots
With EIP-1559 and the PoS proposal looming, ETH mining pools are turning to MEV as a way to increase the value of hashrate for their miners. While there have been a number of concerns with MEV side-effects such as network congestion and chain congestion, one project, Flashbots, aims to make this process more transparent.
12 mining pools accounting for over 58% of Ethereum hashrate are mining on flashbots. This might be responsible for the Ethereum gas prices dropping as the market changes from an all-pay auction to a sealed-bid auction.
Clean Energy Initiatives
- In our last update, we covered the Argo-DMG green energy pool. Since then there have been a number of new clean energy and ESG initiatives. We are expecting a tidal wave of these types of announcements. It will be interesting to see the different lines people draw on classifying an operation as green or ESG.
- Link Global and Neptune Digital, two publicly listed companies inked a new deal for clean energy, called Pure Digital Power. The Pure site will be powered by clean energy sources and develop a Pure carbon credit token or NFT. The site will use a bit of natural gas, but majority renewables.
- Another publicly-listed miner, Fortress is working with Great American Mining (GAM) to launch a new ESG “green” mining venture. Together they will tackle the problem of flared and vented gas, reducing overall damage to the environment by mining with the gas.
- The former CFO of Riot just raised $14mm for a new venture that is positioning as a zero-carbon operation.
Mining Educational Content
Beyond buying ASICs, what are other ways to get exposure to mining? We highlighted some in the blog post below.
Luxor is a US-based mining company.
We run a best-price platform for SHA-256 (Bitcoin) and Equihash. We operate mining pools for Dash, Zcash, Horizen, Decred, Sia, and more.
We also run mining data website, Hashrate Index.
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