Financialization of Bitcoin Mining – Bitcoin Magazine: Bitcoin News, Articles, Charts, and Guides

This year at Bitcoin 2023, mining took center stage. At the Mining Stage and Lounge, some great conversations took place about the future of the industry. Mining is an extremely important part of Bitcoin – it’s how new coins are created and distributed. Bitcoin mining has grown from the basements and backyards of dedicated Bitcoiners to massive ASIC farms operated by large corporations. As bitcoin evolves into a globally used network, the incentive structure for bitcoin mining lends itself to larger and larger mining-related corporate structures. . This leads to changes in the way miners are assessed and funded.

The conversation moved onstage to “The Financialization of Bitcoin Mining,” a panel featuring Leo Zhang, founder of Annica Research; Luxor Chief Operating Officer Ethan Vera; Zachary Cefaratti, founder of Dalma Capital; Vice President of Mining at Galaxy Digital Brian Wright; and Jurica Bulovic, mining manager at Foundry.

A powerful gathering of industry leaders, with great ideas.

On the current state of the market, Cefaratti said, “I think the industry is still misunderstood by capital markets.”

Indeed, in reference to the pricing of public miners, Vera said, “There is quite a disconnect between what you can buy an ASIC for and what you can be valued for in public markets.”

As for how he measures things, Zhang pointed to “the deployment size and capital efficiency of these tools.”

A popular topic was hash rate-based financial instruments, with Bulovic stating, “Debt as a commodity is very attractive to miners…because they can use mining machines as collateral and then use the income from those machines to repay the loan.

Vera said, “My take on hash rate-based instruments is that they are incredibly necessary to the market.”

But that wasn’t quite the deal, with Ceferatti saying, “I wouldn’t bet the farm on a kidnapping deal.”

Cefaratti also said, “One thing that worries me about capital markets and the future…is that a lot of miners have overpromised.”

But Zhang was not so worried. He said, “…in many years, [Bitcoin-native DeFi] will be more important than the equity and debt we are discussing here.

Bitcoin 2023 is part of the Bitcoin event series hosted by BTC Inc, the parent company of Bitcoin Magazine.