Financing Mining Decentralization – Bitcoin Magazine

This year, there has been a concerted effort among Bitcoin mining pools and facilities based in North America to contribute a higher proportion of the Bitcoin network’s overall hash rate from the continent, providing critical decentralization to this system. But this has not been without its challenges. The Bitcoin mining environment is one with high costs and a challenging supply chain.

To help buoy these North American entrants, Bitcoin-focused companies are playing a role typically filled by mainstream financial institutions like banks, carving out a new niche in providing financial advice and services to the fledgling North American mining industry.

The Financial Challenges Of Bitcoin Mining

Despite the steady increase in the price of bitcoin this year, miners are not necessarily benefiting, as intense competition forces the difficulty rate higher and the race for block rewards becomes more intense.

“The difficulty adjustment algorithm and bitcoin price act as a natural hedge for mining,”

Ethan Vera, cofounder of the globally-distributed mining pool Luxor, told Bitcoin Magazine. “When the price is up, you make less bitcoin as a reward. So, if you are mining on a bitcoin-denominated basis or have hedged only your bitcoin price, the risk profile is actually higher.”

Many mining companies need new equipment or need to upgrade to newer models of ASICs, like Bitmain’s Antminer S19 pro or MicroBT’s Whatsminer M30S++, in order to be competitive in this landscape. But there’s a shortage of this updated mining equipment.

“Bulk preorders for the most powerful bitcoin mining hardware from major manufacturers are already queued up…

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