Marathon Digital Ventures into Altcoin Mining to Diversify Post-Bitcoin Halving Revenue Streams

Marathon Digital Ventures into Altcoin Mining

Marathon Digital, the largest public Bitcoin miner by market cap, has announced its expansion into altcoin mining, specifically targeting Kaspa (KAS), to diversify its revenue streams following Bitcoin’s latest halving event. This strategic move aims to mitigate the financial impact of reduced Bitcoin mining rewards and leverage the profitability of Kaspa mining.

Key Takeaways

  • Marathon Digital has deployed its first Kaspa miners and mined 93 million KAS worth approximately $15 million.
  • The company aims to capture 16% of Kaspa’s global hash rate by Q3 2024.
  • Kaspa’s unique BlockDAG technology allows for faster block production compared to Bitcoin.
  • Marathon’s stock saw a slight increase following the announcement.

Expansion into Kaspa Mining

Marathon Digital began its foray into Kaspa mining in September 2023, deploying application-specific integrated circuit (ASIC) miners. The company has invested in 60 petahashes (PH/s) of Antminer KS3, KS5, and KS5 Pro ASICs from Bitmain. These machines are expected to generate up to 95% profit margins given the current network difficulty rate and price of KAS.

Half of Marathon’s Kaspa hashrate is already operational at its Texas facilities, with the remainder expected to go live by Q3 2024. As of June 25, 2024, Marathon has mined 93 million KAS, valued at around $15 million.

Why Kaspa?

Kaspa is the fifth-largest proof-of-work cryptocurrency, following Bitcoin, Dogecoin, Bitcoin Cash, and Litecoin. It has a market cap of $4.2 billion and a 24-hour trading volume of $128 million. Kaspa’s circulating supply is approximately 24 billion KAS, with a current block reward of 103.83 KAS and a total supply of 28.7 billion KAS.

Kaspa employs a BlockDAG (Directed Acyclic Graph) technology, which allows multiple blocks to be produced simultaneously. This results in one block being processed every second, compared to Bitcoin’s average of one block every 10 minutes. This rapid block production potentially allows Kaspa miners to earn more block rewards within a given timeframe.

Financial Impact and Future Plans

Marathon Digital’s move into Kaspa mining is expected to diversify its revenue streams and enhance its operational flexibility. The company aims to dominate Kaspa’s mining industry by capturing 16% of its global hash rate. This is significant within Kaspa’s ecosystem but represents only 1% of Marathon’s 1,100 MW data center portfolio.

The profitability of Kaspa ASICs is a key factor in this decision. A KS5 Pro ASIC can generate approximately $79 in daily profit, compared to $11 from a Bitcoin-mining S21. This increased profitability allows Marathon to establish digital asset data centers in locations where Bitcoin mining may not be viable.

Market Reaction

Following the announcement, Kaspa’s KAS token surged by 9% to a multi-week high of $0.18. Marathon’s stock also saw a slight increase, closing up 0.6% at $19.37 and trading up 2% at $19.75 in pre-market trading. However, the company’s share price is down 27% year-to-date.

Conclusion

Marathon Digital’s strategic expansion into Kaspa mining represents a significant shift in its operations, aimed at mitigating the financial impact of Bitcoin’s halving and leveraging the profitability of altcoin mining. With its existing infrastructure, strong balance sheet, and expertise, Marathon is well-positioned to capitalize on this new revenue stream.

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