Over the past ten years, Bitcoin has emerged as a powerful contender, surpassing all major asset classes and becoming a standard for digital asset investors. For those who believe in the longevity of Bitcoin, the ultimate financial goal is often to increase their Bitcoin holdings rather than accumulate more dollars.

The Role of Bitcoin in Digital Assets

In the digital asset landscape, Bitcoin plays a role similar to that of treasury bonds in the traditional financial system—it serves as a foundational benchmark. While investing always comes with risk, self-custody Bitcoin mitigates risks such as counterparty risk, dilution risk, and other systemic risks often associated with conventional finance.

Considering that Bitcoin has outperformed every other asset class in 9 out of the past 12 years, it’s no wonder it has displaced treasury bonds as the “risk-free rate” in the minds of many investors, particularly those who understand monetary history and appreciate Bitcoin’s verifiable scarcity.

Instead of aiming to accumulate more dollars, the financial goal of digital asset investors is often to acquire more Bitcoin. All investments or expenditures are evaluated based on Bitcoin’s opportunity cost.

MicroStrategy, a multi-billion-dollar public company, is a prime example of this in the corporate world. They have leveraged their access to low-interest debt and the ability to issue new shares to increase their Bitcoin yield, demonstrating a successful strategy of Bitcoin acquisition.

However, the average investor or fund manager doesn’t have the same advantages as a public company like MicroStrategy. They can’t issue shares or borrow money at near-zero interest rates. So, how can they accumulate more Bitcoin and achieve a positive ‘Bitcoin Yield’?

The Role of Bitcoin Mining

Bitcoin miners earn Bitcoin by contributing computational power to the Bitcoin network, earning more Bitcoin than what they spend on electricity to operate their machines. While this sounds straightforward, the Bitcoin protocol uses “difficulty adjustments” to maintain a predetermined supply schedule. This means that as more computational power is dedicated to Bitcoin mining, the finite block rewards are divided into smaller parts.

The most profitable Bitcoin miners are those who can maximize their computational power while minimizing their operational costs. They do this by investing in the latest, most efficient Bitcoin mining hardware and working with the lowest possible electricity rates.

Despite the hurdles, Bitcoin mining remains lucrative. Under current market conditions, an Antminer S21 Pro can produce 1 Bitcoin for around $40,000 in electricity costs, while the price of 1 Bitcoin is nearly $98,000. This results in an operating margin of almost 145%, significantly higher than the 5-10% considered healthy for most businesses.

Bitcoin Price Growth vs. Difficulty Growth

The price of Bitcoin, like other financial assets, is determined by the most recent transactions between buyers and sellers. This results in notorious price volatility as prices can quickly shift based on the availability of sellers or buyers in a specific range.

However, the speed at which Bitcoin’s price can move is much higher than that of network mining difficulty. The latter requires a combination of ASIC manufacturing, energy production, and mining infrastructure development, which cannot be hastened. This dynamic creates opportunities for Bitcoin miners to accumulate significant amounts of Bitcoin.

Price Volatility in Bitcoin Mining Hardware

During bull markets, Bitcoin miners enjoy wider profit margins as well as the fact that ASIC prices often move in tandem with Bitcoin prices. This correlation means that the upfront costs for purchasing mining machines are not lost investments but have a price that can be recouped.

Blockware Marketplace offers a platform that allows any investor to gain direct exposure to Bitcoin mining. Users can purchase Bitcoin mining rigs that are already online and hosted at one of Blockware’s tier 1 data centers with access to industrial power prices. Additionally, this platform enables miners to capitalize on volatility in ASIC prices, recoup the cost of their machines, and accumulate more Bitcoin faster than traditional methods.

This innovative approach removes the barriers that have traditionally made hosted mining challenging, allowing miners to focus on their ultimate goal: accumulating more Bitcoin.

For institutional investors seeking bulk pricing on mining hardware, they can contact the Blockware team directly.