Your Market Share Doesn't Matter In Bitcoin Mining

“Market share is not an important determinant of profitability: In this business, in contrast to the newspaper or grocery businesses, the economic rule is not survival of the fattest.”

This means that being profitable per miner, per TH, is more important than how many miners, or TH you have. Unlike in other industries where the biggest players all race to grab dominant market share and then change or at least influence the price ie. revenue they are paid. 

In Bitcoin mining, there is no way to change your revenue per TH by capturing more “market share” or hashrate. The idea that you can suddenly become profitable at a large scale when you aren’t at a small scale is ridiculous. The economies of scale also top out relatively quickly. You would be surprised how little energy it takes to get access to very low-cost energy. 

We talk about 2-5MW sites as a typical small to medium-sized build. But in many areas of the country, a constant load like this would be the largest buyer of electricity in the county. Therefore getting access to the lowest rates. The same applies to purchasing miners. 

If you can’t be profitable with 2-5MW, you very well won’t be profitable at 200-500MW.   If anything your economics per miner start getting worse. 

“Survival of the fattest” means that in other industries that don’t produce commodities. The Coca-Cola Company (KO) is a good example of this, they are the only company in the world that makes the soft drink Coke. A one of a kind product, that can’t be replicated. Coke can set the price they want for their unique product and customers will gladly pay it. They hold a significant portion of the soft drink market share and the price they set very much affects the price that everyone else in the market can charge.

This doesn’t apply in Bitcoin mining, you cannot demand a higher price for the Bitcoin you produce, because there is no way to differentiate it from the rest. This is how commodity industries work. Survival is based on a company's ability to produce the underlying commodity for less than they can sell it for on a per-unit basis.

The focus of a Bitcoin miner should be not on acquiring 10,000 ASICs but on how I make 1 ASIC profitable and then repeat that process 10,000 times. 


Wilson Mining

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