Bitcoin ( BTC ) has established itself as the best-performing asset of the past decade, boasting a 10-year compounded annual growth rate (CAGR) of ~63%.

In the crypto world, BTC is often regarded as the benchmark by which all other assets are measured. This is a considerably higher bar than the traditional financial world’s “risk-free rate” — US Treasury bonds, which currently offer a 10-year yield of around 3.78%.

Bitcoin outperformed traditional assets for the majority of the last decade. Source: Blockware

As a result, many investors within the crypto space strive to outperform Bitcoin . A desire to outperform BTC has led many crypto-forward investors further out on the risk curve, often into speculative territory. Low-liquidity altcoins, leverage trading, or both simultaneously, have become commonplace. Unfortunately, these strategies frequently result in underperformance due to market volatility, lack of liquidity, and overexposure to downside risks.

Bitcoin mining, on the other hand, comes forth as a reliable way to consistently outperform BTC without relying heavily on speculation.

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 going from $60,000 to $150,000 would be a 150% increase. In this scenario, here’s how the monthly profitability for various ASICs would increase:

  • S19 XP: $12 → $125 (939%)
  • M66s: $66 → $331 (398%)
  • S21: $63 → $224 (252%)
  • S21 Pro: $108 → $296 (173%)

At Blockware, we call this phenomenon the ‘Mining Profit Multiple.’ Because many Bitcoin miners operate with a fixed energy cost , revenue growth causes non-linear growth in net profit margins. This positions miners for outsized benefits when the Bitcoin price rises.

The chart in the scenario of a 2% increase in BTC price. Source: Blockware

ASIC prices - specifically the latest generation machines - have seen their prices move in tandem with the Bitcoin price during previous bull markets. During the last cycle, the Antminer S19 began 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 likely has a combination of spot Bitcoin, Bitcoin mining stocks, other BTC-exposed equities — such as MSTR and COIN — and ASICs.

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

  • Better fleet efficiency: When you control your own fleet of ASIC miners, you can ensure higher operational efficiency compared to public mining companies, which may have diverse priorities that affect overall productivity. The blended average efficiency for the best-of-the-best public mining companies is in the 20 to 25 W/T range. The latest Bitmain ASIC, the S21 Pro, has an efficiency of 15 W/T.
  • No executive compensation packages or equity dilution: Publicly traded mining companies are notorious for diluting their shares in pursuit of growth - with shareholders rarely benefiting from the growth in the form of dividends. Moreover, these public equities have significant overhead costs tied to executive compensation and stock options. When you mine Bitcoin yourself, these risk factors are eliminated, enabling you to capture more of the mining upside.
  • More balance sheet strategy optionality: By controlling your own mining operations, you become your own executive team. This gives you greater flexibility and autonomy in executing balance sheet strategies, including deciding when to reinvest in more mining equipment or when to take profits.
  • Direct Bitcoin accumulation to cold storage: Perhaps the most significant advantage of mining Bitcoin is that you can accumulate BTC directly and send it to cold storage. This provides both security and control over your holdings, without the counterparty risks that come with holding mining stocks or keeping assets on exchanges.

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.

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