The Bitcoin mining industry has rapidly industrialized in recent years. Only miners that can secure the most efficient mining rigs with the lowest electricity rates can compete. Small-scale and hobbyist miners have become virtually nonexistent. Those that do exist typically operate at a loss or extremely tight margins.
Several predatory business models have marketed themselves as solutions to this problem. At-home miners like Coinmine target retail miners but typically have payback periods of 6+ years. The low power and efficiency of these miners make them redundant in an industry which strives to optimise performance.
Cloud mining is another business which has emerged to prey on a retail market that poorly understands the dynamics of mining. When cloud mining contracts are purchased, they are typically barely profitable at the time of purchase. However, they quickly become unprofitable when more hashrate is inevitably added to the network and the difficulty of mining rises.
HASHR8 is launching a product which effectively helps small-scale and hobbyist miners operate profitably. As it stands, countless mining facilities are operating at only a fraction of their maximum capacity. Price appreciation in 2017 and bullish narratives surrounding the 2020 halving drew enormous investment in Bitcoin mining infrastructure. Some of this investment has led to mining facilities operating at only a fraction of their full capacity.
This spare capacity could easily be filled by the idle or unprofitable rigs of smaller-scale miners. However, the current miner hosting business is broken. Rig owners need to navigate through questionable third-party brokers to secure capacity. The specifics of the hosting agreement and electricity rates are often vastly uncertain. The agreement becomes even more complex if a miner wishes to also purchase rigs to host. Securing hardware requires the miners to contact countless brokers and distributors whose legitimacy is oftentimes hard to assess.
Compass will completely change the role of smaller-scale and hobbyist miners in the industry. Compass enables miners to seamlessly purchase mining hardware and secure hosting at the most respected facilities in the world. Miners globally will be able to tap into the lowest-cost facilities worldwide. Any facility listed on the Compass platform has already undergone rigorous due diligence. Miners will not need to worry about the myriad of issues which can arise as they send rigs to facilities. Miners will be able to host their rigs at facilities at a suitable location and an attractive electricity price.
Those that don’t own rigs will be able to benefit from Compass’s vast network of sellers and distributors. A variety of rigs can currently be purchased on the Compass website. These rigs can either be delivered directly to the buyer or can be sent to a hosting facility of their choice. While several North American facilities are currently listed on the Compass platform, miners will also have a choice of several other low-cost regions. Facilities in Sichuan, Kazakhstan, and Iceland are currently listed on Compass with electricity rates as low as $0.043 per kWh.
As it stands, a North American miner with the latest-gen Antminer S19 Pro will have a profit of roughly $85 per month at the national average electricity price of $0.13 per kWh. With a price of roughly $2,500, this means that these miners would need to wait roughly three years to breakeven. This assumes that the difficulty of mining will not go up in the meantime which it certainly will with all of the new rigs being deployed. By accessing a facility with a rate of $0.06, profit margins for this miner effectively double and breakeven times become much shorter and much more aligned with the industry-standard.
Small-scale miners will be able to compete in an unprecedented way. Since the advent of Bitcoin ASIC machines in 2013, the industry has been going in a unilateral direction of increasing nonlinearity. Compass will break that trend and enable hashrate to spread to miners that are currently considered obsolete.
Compass will initially roll out with a hardware market and hosting capacity available to miners in a variety of regions. Compass will give even greater optionality to miners as the product progresses. We have several more regions in the pipeline and also the minimum order quantity will be shortly reduced with a new product addition. Stay tuned!