Outperforming Bitcoin: The Risks of Leverage and Low-Liquidity Cryptocurrencies
With a compound annual growth rate (CAGR) of approximately 63% over the last ten years, Bitcoin has emerged as the asset with the best performance of the last ten years. Within the cryptocurrency realm, Bitcoin is frequently considered the standard by which all other assets are evaluated. This benchmark is far higher than the “risk-free rate” offered by US Treasury bonds, which now provide a yield on a 10-year bond of about 3.78% in the traditional financial sector.
Because of this, a lot of cryptocurrency investors aim to do better than Bitcoin. In this light, many crypto-forward investors have pushed themselves further out on the risk curve, frequently into speculative territory, in an attempt to outperform BTC. Leverage trading, low-liquidity cryptocurrencies, or both at once, are now typical. Unfortunately, because of the volatility of the market, limited liquidity, and excessive exposure to negative risks, these techniques often lead to underperformance.
Bitcoin Bull Market Boosts ASIC Profitability: S19 XP and S21 Lead the Charge
Because mining profit margins and ASIC pricing are closely linked to the price of bitcoin, miners are in a unique position to beat spot BTC during bull cycles. The increase in value of Bitcoin from $60,000 to $150,000 would be 150%. As a result, the monthly profitability of various ASICs will increase as follows:
- S19 XP: $12 → $125 (939%)
- M66s: $66 → $331 (398%)
- S21: $63 → $224 (252%)
- S21 Pro: $108 → $296 (173%)
This phenomenon is known at Blockware as the Mining Profit Multiple. Net profit margins develop nonlinearly due to revenue growth since many Bitcoin miners have fixed energy costs. As a result, miners stand to gain significantly from an increase in the price of bitcoin. In past bull markets, the price of ASICs, particularly the most recent models, has moved in lockstep with the price of Bitcoin. The Antminer S19 started trading at about $24/T in early 2020 during the previous cycle.
Overcoming Mining Delays: Blockware Marketplace Transforms Hosted Bitcoin Mining
Spot Bitcoin, mining stocks, other BTC-exposed equities, and ASICs are probably all included in a well-balanced portfolio of assets denominated in Bitcoin. Possessing an ASIC offers some noteworthy benefits when it comes to exposure to Bitcoin mining:
- Increased fleet effectiveness
- Greater flexibility in the balance sheet strategy
- Directly store Bitcoin in cold storage
In the past, the lengthy lead times involved in deploying mining equipment have been a major obstacle for hosted mining. ASIC miner delays can be expensive for miners and slow down the growth of Bitcoin. Furthermore, many investors have found it challenging to effectively engage in hosted mining due to concerns about transparency and a lack of liquidity in the mining industry. The goal of Blockware Marketplace is to address these issues. Blockware is redefining the hosted mining business with its zero lead time hosted mining, transparent, real-time insights into ASIC uptime, and liquid market for buying/selling ASICs.
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