The establishment of large Bitcoin mining institutions is inevitable
2020 marks a new era for the institutionalization of cryptocurrency mining, bringing with it both advantages and new challenges.There are very few investments offering such an opportunity. This is why there are plenty of institutions entering the world of Bitcoin (BTC) mining and starting to build mega-facilities.
Securing next-gen hardware
At its full capacity in 2018, Bitmain was able to produce over 95,000 mining rigs per week. However, from that point, production levels fell, partly because of an ongoing legal dispute. MicroBT is set to provide 1.3 million teams in 2020, adding 25,000 teams per week to the equation.
We can see that supply of new equipment is quickly decreasing. Building relationships with manufacturers today is vital to ensure a wide allocation of this new equipment.
Reduce capital expenditures
Economies of scale are strikingly different from decentralization. However, like most other industries, the world of mining rewards size. Large mining companies receive discounts on ASIC equipment retail prices.
An average return period is about 300 days for new generation equipment. The discount can reduce it by more than a month.
On the infrastructure side, building a 30-megawatt farm can be done at a much lower price per megawatt than a 3-megawatt facility.
Maximize operating profit
Cheap electric power requires spending a large amount of capital on things like buying land, building large infrastructure, obtaining power plants and other equipment, etc. The cost of electricity is one of the main factors that define the success of miners.
In addition to looking for cheap electricity, large miners can negotiate lower fees for the pool, fees for the development of firmware and ASIC management software.
Access to better financing mechanisms
Cryptocurrency business requires equipment updates. Access to various forms of financing like debt, equity, equipment financing, and ASIC equipment financing plays a critical role in keeping mining farms large and enjoying the profits.
Manufacturers put on a tie
Manufacturers like Bitmian are first in the mining industry. In 2016, the arms race began for who could bring to put more machines on the market.
When institutions came to the industry, the mentality of “production first, everything else later” began to change.
Most manufacturers today must hold weekly calls with their large customers, offer warranties on their machines. They have repair centres, and try to be more transparent on shipping and pricing. However, they still got a long way to go.
This trend of professionalization will likely resume with MicroBT, Bitmain and whoever wants to compete in the West.
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