MARA dumped 15,000 BTC in three weeks.

Bitdeer sold every single coin in its treasury.

Miner debt exploded 500% in a single year.

Iran bombed the world’s biggest LNG plant.

It all means something.

For Bitcoin miners specifically:

Every miner that leaves makes the math better for every miner that stays.

TLDR

• Public miners carry $12.7B in debt from a hashrate arms race that overheated the network. The math is broken for most listed miners.

• The AI pivot is rational: a 250 MW site is worth 10x more as an AI data center. Listed miners may pull 70% of revenue from AI by December.

• The Ras Laffan LNG attack spiked global gas prices 32%, but US Henry Hub stays flat thanks to export terminal bottlenecks. US miners are insulated, for now.

• Permian Basin gas prices went negative 38 out of 51 trading days in 2026. Stranded gas miners pay nothing to hash.

• The crisis is a sorting mechanism: stranded gas, remote hydro, and low-cost private miners inherit the network.

All of this covered in a 5min read →

Bitcoin mining is not dying, it’s splitting

Public miners could generate 70% of their revenue from AI by December 2026:

That is up from about 30% today.

This is not mere “diversification”, this is a full identity change.

And the backstory matters.

Bitcoin miners entered the 2024 halving carrying $12.7 billion in debt.

That is up from $2.1 billion the year before (500% increase)

VanEck called it the “melting ice cube problem.”

A miner that skips one hardware cycle loses network share forever.

So miners kept borrowing to hold their place in line

The hashrate hit 1.15 ZH/s in October 2025 (+44% in 10 months)

But public miners only contributed about 80 EH/s of that growth.

The rest came from private operators, state-backed miners (Russia & China), and hydro facilities in Ethiopia and Paraguay running at 1-3 cents per kWh.

The key point:

The April 2024 halving cut the block subsidy to 3.125 BTC.

Hashprice dropped 44%, from $50/PH/day to $28/PH/day in February 2026.

The weighted average cost for public miners hit $79,995 per BTC.

The math speaks for itself.

The Great AI Pivot

So the public miners did what any rational economic actor does when the core business bleeds cash.

They pivoted.

The evidence:

• MARA sold 15,133 BTC in three weeks ($1.1 billion) to buy back debt.

• Bitdeer sold every coin in its treasury and raised $368 million for AI deals

• Riot sold $200 million of BTC.

• Bitfarms dropped “bitcoin company” from its name.

• Core Scientific is directing 1.3 GW of Texas power capacity to AI hosting.

Go to any of these companies’ websites and it’s all AI.

A 250 MW Bitcoin mining facility costs about $250 million to build with uncertain return.

The same 250 MW as an AI data center returns $2.5 billion.

Show me the incentive, and I will show you the outcome.

Miners who hold land and power purchase agreements are sitting on infrastructure that is worth an order of magnitude more to a hyperscaler than to the Bitcoin network.

These companies are not Bitcoin miners anymore.

They are energy infrastructure companies.

Critical detail:

When a mega-miner converts a site to AI, it keeps the land and power contract.

The ASICs get liquidated. S19s and S21s are flooding the secondary market at $15/TH. In 2022, that same hardware traded at $80/TH.

This creates a cascade where cheap machines need cheap power.

The only places left with cheap power and available land are stranded gas wellheads, remote hydro sites in Ethiopia and Paraguay, and international markets with fast permitting.

The AI pivot takes hashrate offline and repurposes the physical facilities that housed it.

And it sends a wave of cheap hardware to the outskirts of the grid.

The LNG Shock Everyone Misread

Now layer in the energy crisis. And pay attention, because the headlines are misleading.

Iran struck Qatar’s Ras Laffan Industrial City on March 18.

This is the world’s largest LNG complex.

Two production trains were damaged and Qatar’s energy minister says repairs take 3 to 5 years (QatarEnergy halted all LNG production)

The Strait of Hormuz closure locked in existing Gulf LNG inventory, cutting about 20% of global LNG flows.

European TTF gas prices surged 32% overnight to $24.19/MMBtu.

Lloyd’s List called it “immediate and immense” with “no spare capacity” in the global LNG market to absorb the loss.

Natural gas represents 38.2% of Bitcoin’s total energy input. It is the single most important fuel for mining. When people say “oil exposure,” they undercount the real risk, which runs through natural gas and US grid prices.

Most analysts concluded: rising energy costs crush Bitcoin miners.

But, US domestic natural gas prices have stayed flat.

Henry Hub trades between $3.10 and $3.40/MMBtu since the war began. The EIA forecasts a 2026 average of $3.80. Why? US LNG export terminals are at full capacity. The gap left by Qatar cannot be filled by US exports. But that also means the global price spike does not drain US domestic supply. Export bottlenecks insulate Henry Hub from TTF and JKM.

For the 90%+ of US mining that runs on grid-supplied natural gas, the Ras Laffan attack is far less damaging than the 2022 European energy crisis was for European miners. The risk scenario exists (Tacto forecasts Henry Hub reaching $5.50 to $8.00 if the Hormuz closure persists), but the base case is stability.

The Permian Basin Paradox

Now here is the part that flips the whole narrative.

The Waha Hub spot natural gas price in West Texas has been negative for 38 out of 51 trading days in 2026. On some days, prices fell to negative $9.75/MMBtu, which means Permian Basin producers are paying to have their gas taken away.

Permian wells produce excess gas as operators drill into gas-rich intervals.

Pipeline capacity to move that gas is 12 to 18 months behind demand.

Record output of 27.6 Bcf/d has nowhere to go.

Blackcomb Pipeline (2.5 Bcf/d) arrives later in 2026.

Until then, the gas is stranded.

For a Bitcoin miner with a container full of the machines they got at a discount from a pubco miner, strategically positioned at the wellhead, this is the inverse of a crisis.

The fuel is free.

On negative-price days, the producer pays the miner to consume the gas.

At that cost structure, any model is profitable.

Crusoe Energy (partnered with ExxonMobil), Giga Energy Solutions, and BigSur Energy already run containerized operations on Permian and Bakken stranded gas. The FLARE Act provides full expensing for this infrastructure. Texas HB 591 adds severance tax exemptions.

So:

The global LNG crisis could make grid electricity more expensive but stranded gas upstream is largely unaffected.

The Sorting Framework

This brings us to the thesis:

the AI pivot and the LNG crisis are not bad for Bitcoin mining across the board.

They’re a sorting mechanism →

Stranded gas miners: Power is effectively zero. Immune to global LNG pricing. This is the natural destination for mining (i.e. Kardashev Type I)

International hydro miners (Ethiopia, Bhutan, Paraguay): Power at 1 to 3 cents per kWh. Insulated from the LNG shock. Receiving cheap liquidated machines from the AI pivot. Profitable and expanding.

US grid-tied miners with next-gen hardware: On-grid US miners with stable power purchase agreements independent of O&G inflation. Difficulty drops help. The 20% cumulative difficulty reduction from February to March 2026 boosted per-hash revenue by about 25%. (Simple Mining falls into this bucket with 65% wind power)

Everyone else: Cash-negative, shutting down, selling hardware, and pivoting to AI if possible.

What To Watch

The difficulty adjustments. The next estimate is +5.32%. If it comes in flat or negative, more miners are leaving.

Waha Hub spot prices. If negative pricing persists through Q2 (and it should, with pipeline capacity months away), stranded gas mining economics stay extraordinary.

Henry Hub vs. TTF spread. As long as US export terminals stay at capacity, the decoupling holds. If new terminal capacity comes online or policy changes allow more exports, the insulation breaks (no incentive to do this)

The 2028 halving shadow. At current economics, a much higher BTC/USD price is needed for the majority of public miners to conduct any mining business. Only miners building sub-4 cent infrastructure now will be viable at any Bitcoin price below $120K after the next halving.

The network does not care who leaves. It reprices the reward for those who remain.

Should be another interesting week in markets.

Where the energy flows, the money follows.

References:

Debt among Bitcoin miners has ballooned from $2.1 billion to $12.7 billion in just one year

70% of “miner revenue” will come from AI by the end of 2026.

Public miners added 80 EH/s in 2025

LNG supply disruption will be ‘immediate and immense’

- Billy Boone

The last time the index reached a score of 5 was August 2019, when Bitcoin was $10,000.

Investing wisdom says this is opportunity:

• Warren Buffett (Berkshire Hathaway, 1986): “We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful.”

• Sir John Templeton: “Bull markets are born on pessimism, grow on skepticism, mature on optimism and die on euphoria.”

• Contrarian proverb: “Buy when there’s blood in the streets, even if the blood is your own.”

• Benjamin Graham: “In the short run, the market is a voting machine. In the long run, it is a weighing machine.”

• Warren Buffett: “The market is a device for transferring money from the impatient to the patient.”

• J.P. Morgan: “In bear markets, assets return to their rightful owners.”

• Peter Lynch: “Far more money has been lost by investors trying to anticipate corrections, than lost in the corrections themselves.”

• Howard Marks: “The price can be lower than it should be only when most people don’t see its merit.”

It’s easy to buy Bitcoin when everyone thinks it’s going to $1M tomorrow. When your family and friends think you’re genius.

But the reality is, Bitcoin is only 17 years old. Gold is 3000 years old, and they compete for the same pool of liquidity.

So you might be early. And you have to be ok with that. Because being early is often indistinguishable from being wrong to everyone else.

If you're anything like me, you lie awake at night thinking about how Bitcoin scales from here.

Every Bitcoin investor knows the halving schedule.

Every four years, the block subsidy gets cut in half. It happened in 2024 and it’ll happen again in 2028.

What most people miss is the second half of the equation.

As the block subsidy shrinks toward zero, transaction fees are supposed to pick up the slack.

Satoshi mentioned this in the whitepaper:

But what if the fees never arrive?

Right now, the most celebrated scaling solution in Bitcoin (the Lightning Network) routes the bulk of transactions off-chain.

And every single fee paid on Lightning goes to Lightning node operators. Nothing goes to miners.

If Lightning wins, miners lose incentive.

And if miners lose incentive, then Bitcoin is more vulnerable to a 51% attack.

The Question You Should Be Asking

Most people who follow Bitcoin evaluate L2 solutions on speed, cost, and user experience.

Which is reasonable criteria, but they skip the one question that determines whether Bitcoin survives long-term as a secure payments network: where do the transaction fees go?

This matters because Bitcoin mining has a math problem that price appreciation alone cannot solve.

In 2009, miners earned 50 BTC per block. Today, that number is 3.125.

That’s a 94% decline in the block subsidy. It drops another ~16% per year (compounded), and it will keep falling until it reaches zero.

Price has offset this. Bitcoin is up roughly 15,000% over the last 10 years, which has more than compensated for the shrinking subsidy.

Another 15,000% from here puts Bitcoin at $10.5 million per coin.

At that price, Bitcoin’s total value (~ $200T) would possibly exceed all of the fiat money in the world ($150T).

If that is the “ceiling” then miners can no longer rely on price appreciation 32 years from now to offset subsidy decline.

Even at $50 million per coin, by 2080 the block reward translates to roughly $9,536 per block. Which is maybe enough to buy a carton of eggs in 2080 dollars.

What does this mean?

Transaction fees aren’t a nice-to-have.

They are the entire long-term incentive model for the majority of Bitcoin security, or so it seems.

The Belief Most People Get Wrong

The popular view:

“Lightning Network scales Bitcoin. More Lightning adoption is always good for Bitcoin.”

What actually matters: Lightning (and similar non-mined L2s) route transactions off-chain and keep the fees for themselves.

Bitcoin miners only get fees when the channel is opened and closed.

The question is not whether L2s will dominate Bitcoin transactions. They will.

The question is: do those L2s feed the miners, or starve them?

The Bitcoin L2 Trilemma: Why This Is Hard to Fix

The second thing to understand is why building a “good” Bitcoin L2 is so difficult. There’s a trilemma here that most people haven’t seen articulated clearly.

Every Bitcoin L2 falls into one of three buckets, and each comes with a fundamental trade-off:

1. Off-Chain Networks (Lightning)

No blockchain, no public ledger. Data is stored by users. This gives you scalability and privacy, but limited smart contract functionality and a terrible user experience for anyone not running their own node. Lightning has received over $100 million in funding and years of elite developer hours. The results have disappointed many of its own creators. Only about 5,600 BTC sit on Lightning (0.025% of circulating supply). Multiple developers have publicly walked away or expressed serious frustration with the protocol’s fundamental limitations.

2. Decentralized Sidechains

These introduce a new token to fund their own security budget. The token lets anyone participate in consensus and creates an open marketplace of miners. The trade-off: a new token complicates the user experience, invites centralization, and deviates from the entire point of Bitcoin. But it also enables community building and capital raising for R&D, which matters in a space where most projects fail.

3. Federated Sidechains

No new token. Instead, a fixed group of trusted entities (like Liquid’s 15 crypto companies) run the consensus. Better user experience since you use a pegged version of BTC. But you’re trusting the federation, which limits decentralization. And without a token subsidizing security, the system depends on transaction fees that may be negligible for years until adoption picks up.

None of these are perfect. Each sacrifices something critical. The question is which sacrifice is most acceptable for the goal of keeping miners funded and the base layer secure.

The Solution (And What It Looks Like When It Goes Wrong)

The third thing to understand is what a potential solution looks like, and why execution matters more than the idea.

Merge mining is the most promising path for routing L2 fee revenue back to Bitcoin miners. The concept was invented by Satoshi in 2010. It lets miners find blocks on multiple networks simultaneously, so they can collect transaction fees from L2s without doing extra work. All L2 block value converts into L1 mining revenue.

Rootstock and Fractal Bitcoin demonstrated this is possible in practice, attracting as much as 94% of Bitcoin’s hashrate for merge mining. BIP 300 (drivechain) proposes a framework for merge-mined sidechains that could launch without changes to Bitcoin Core, using what’s called a CUSF (Core Untouched Soft Fork) activator.

The benefits over Lightning are significant: no channels, no interactivity requirements, no liquidity problems, no payment failures, direct L2 onboarding without using L1 bytes, and 100% of fees flowing to miners instead of 0%.

But merge mining is not magic. And we have a recent example of what happens when it goes wrong.

Fractal Bitcoin launched claiming to use Bitcoin Core code with 30-second blocks. It attracted roughly 40 EH/s from Bitcoin when three major mining pools (AntPool, F2Pool, SpiderPool) jumped in for the rewards.

In practice, it was a mess:

• Fractal’s “Cadence Mining” system only merge-mines 1 out of every 3 blocks with Bitcoin. The other 2 are mined solely on Fractal. This defeats the purpose as it tries to pull miners away from Bitcoin rather than letting them mine both simultaneously.

• The chain’s data is growing at an unsustainable rate, which is growing at 2TB/year (20x faster than Bitcoin L1). Running a full node becomes prohibitively difficult, which is a centralization problem.

• Despite claiming to ease Bitcoin congestion, Fractal launched a 50% premined token ($FB) that has only gone down:

Not a good look.

Fractal is what happens when merge mining is used as marketing language rather than a genuine alignment mechanism.

The token, the cadence mining design, the unsustainable chain growth: all point to a project optimizing for short-term miner incentives rather than long-term Bitcoin success.

This is why the trilemma matters. You can’t just slap “merge mining” on a project and call it solved. The bridge design, the token structure (or lack thereof), the consensus model, and the node accessibility all have to work together.

What to Watch For

The soft fork process in Bitcoin is gridlocked. No new soft fork has activated since Taproot in 2021. BIP 300 needs 51%+ of hashrate for adoption.

The entities with the most at stake are ASIC manufacturers: Bitmain, MicroBT, and Canaan.

In a future where transaction fees are the bulk of mining revenue, every new ASIC they sell is only worth the fee revenue it expects to earn.

If the fee pie stays small because non-mined L2s captured the volume, they sell fewer machines and revenue declines.

Important signals to keep an eye on:

• Any major ASIC manufacturer publicly supporting merge mining or BIP 300

• Mining pools integrating CUSF activator software

• New L2 projects launching with 100% fee passthrough to miners (vs. launching tokens)

• Lightning Network capacity continuing to decline in absolute BTC terms

• BitVM progress on trust-minimized bridges for federated sidechains (this could change the trilemma dynamics)

The Bitcoin L2 landscape is still early and most of these projects will fail.

But the structural question of who gets the fees is not going away. It will only become more urgent the closer we get to 2032

AI as Bitcoin’s Code Auditor

There’s one more angle here that almost nobody is discussing. And it might be the thing that breaks the gridlock.

Bitcoin’s soft fork problem is not purely political. It’s also a trust and review bottleneck. Bitcoin Core has a tiny pool of qualified reviewers. Every proposed change needs exhaustive security auditing before anyone will consider running it. And the CUSF approach (running a separate activator alongside Bitcoin Core) introduces new code that miners would stake their operations on. Who audits that code? Who verifies it won’t introduce vulnerabilities?

This is where AI enters the picture. And not in the vague “AI will change everything” sense. In a very specific, already-happening sense.

Anthropic just launched Claude Code Security, a tool that scans codebases for security vulnerabilities and suggests patches for human review. During testing, Claude Opus 4.6 found over 500 previously unknown high-severity vulnerabilities across production open-source codebases. These were bugs that survived decades of expert human review and millions of CPU-hours of automated testing. Claude found them by reasoning about code the way a security researcher does.

Think about what this means for Bitcoin specifically.

The CUSF activator for BIP 300 is written in Rust. It’s open source. It’s the kind of codebase that an AI security tool could audit rigorously before a single miner runs it. Same for any merge-mined sidechain code. Same for the bridge implementations that connect L2s to L1. These are all critical pieces of infrastructure where a single vulnerability could break Bitcoin.

Most Bitcoin L2 projects are built by small teams without dedicated security budgets. Lightning’s own history proves this: bugs that crashed nodes, routing vulnerabilities, liquidity exploits. A tool that can scan an entire codebase, find the subtle flaws, and suggest patches (with human approval required before anything ships) would be transformative for the pace of successful L2 development.

This doesn’t replace human judgment. The Bitcoin Core developers, the L2 builders, the miners, they all still make the final call. But it dramatically lowers the risk of deploying new code. And that lower risk is exactly what’s needed to accelerate shipping upgrades.

Bitcoin’s conservatism is a feature, not a bug. The network should be slow to change. But “slow” and “frozen” are different things. Right now, Bitcoin is frozen because the cost of getting new code wrong is existential, and the review capacity is too small. AI security tooling expands that capacity without lowering the bar.

Attackers will use AI to find exploitable weaknesses in Bitcoin infrastructure, which means defenders need to get there first.

If you own Bitcoin, you’re betting it stays secure for decades. That bet depends on miners having a reason to keep mining, L2s being built that actually pay them, and the code underneath all of it being bulletproof.

The security of your Bitcoin isn’t guaranteed by code alone. It’s guaranteed by those paid to enforce it.

- Billy

This letter is now $21/month.

It will remain free for all active Simple Mining clients.
If that’s you, email me from the address you use for Substack and I’ll comp your subscription.

Going forward, this publication will focus on capital allocation, timing, and risk in Bitcoin mining (and overall investing ideas I have about the sector).

The mission is to build a favorable position for what will be the greatest dual catalyst the market has ever seen:

Bitcoin & AI

So fewer broad educational topics (which will be published for free at Simple Mining Insights), and more direct content related to investing in Bitcoin mining.

2026 is here, and Bitcoin has officially broken a strong trend it has been following since 2014: red candle (down year), following by three green candles (up years)

What does this mean?

Bitcoin is in uncharted territory.

More importantly for readers of this letter, what does this mean for Bitcoin mining?

Most people look at hashprice and see a broken market:

They miss the signal hiding in plain sight.

Hashprice tells you when to enter.

Right now, we sit at levels we haven’t seen since ever.

The question is simple: does this mean mining is dead, or does this mean a unique opportunity is forming?

What separates miners who ROI from miners who bleed capital until they quit?

Timing.

And timing comes down to one relationship: price growth vs difficulty growth.

Let me show you the math:

The Mining Profitability Equation

Before we forecast 2026, we need a shared framework.

Mining profitability splits into two buckets: market conditions and capital conditions.

Market conditions (external, you have no control over these):

• Difficulty (how many miners compete for the same pie)

• Bitcoin price (what your mined BTC sells for in dollars)

• Block subsidy (currently 3.125 BTC per block)

• Transaction fees (the wildcard that spikes during network congestion)

These four variables combine into one metric:

Hashprice.

Hashprice tells you expected revenue per unit of hashpower.

It rolls everything together so you can compare apples to apples across time.

Capital conditions (internal, what you have more control over):

• Power cost (the single most important variable)

• Hashpower (hash output)

• Machine efficiency (how well does the machine turn input joules into hash output)

• Uptime (percentage of days your machines run)

The formula is simple: Revenue minus Cost equals Profit.

You can see there are still machines with Revenue > Cost at 8 cents per kilowatt hr:

But the timing of your entry changes everything.

Why Hashprice Looks “Bad” (And Why That Might Be Good)

In 2017, miners earned over $3 per TH per day. Today, we hover around $0.03 to $0.04

Does this mean mining is a “bad investment?”

No.

It means the market matured.

Consider the context of 2017:

• Bitcoin price rose over 2,000% in one year

• Machines produced 10 TH (today’s produce 400 TH)

• Block subsidy was 4x larger (12.5 BTC)

• Difficulty was a fraction of today’s level

That was the perfect storm.

Massive price appreciation, low competition, high issuance.

Today’s lower hashprice reflects an industrialized market.

More miners. Better machines. Tighter margins.

But here is what matters: hashprice lows creates entry points.

And entry points determine ROI.

The Three Golden Windows

When we study history, three periods stand out where miners crushed it:

April 2019 to September 2019

• Price: +100%

• Difficulty: +68%

October 2020 to May 2022

• Price: +230%

• Difficulty: +55%

October 2023 to April 2024

• Price: +130%

• Difficulty: +46%

See the pattern?

When price growth exceeds difficulty growth, miners win.

Transaction fees also spike during these windows (same period shaded red overlay)

Around halvings, fee revenue has hit almost 70% of total miner revenue.

These periods make up for all the bad days.

If you miss them, you struggle to ROI.

If you catch them, your investment compounds.

The same principle applies to Bitcoin itself.

Miss the best 10 trading days and you miss most of Bitcoin’s annual gains:

Favorable mining = price growth > difficulty growth + fee revenue spikes.

Now let’s look at 2025 and forecast 2026

2025: The Setup Year

Here is what number 2025 ended with:

• Price: -6%

• Difficulty: +36%

Difficulty crushes price. This is the opposite of our golden windows.

Why does difficulty keep climbing?

Miners ordered machines during the 2024 rally thinking 2025 would be an explosive year.

Those machines went online and pushed hashrate to an all-time high.

We then saw a hashrate correction (3 negative difficulty adjustments in a row).

Q4 BTC price didn’t play out according to many miner expectations, and those with fragile margins were forced to unplug.

This dynamic creates miner capitulation, BTC sell pressure, and only the best operators hold on.

But here is the key insight:

periods where difficulty outpaces price have historically preceded the opposite.

The rubber band stretches. Then it snaps back.

The 2026 Thesis

Three forces converge to make 2026 the “20% producing 80% of the return”

Force #1: Price Projections

Quantile models based on historical distribution put 2026 Bitcoin price between $164,000 and $205,000 (discounted to premium).

That represents 86% to 133% growth from current levels.

This aligns with prior bull phase magnitudes. We see similar percentage moves in each of our three golden windows.

Bitcoin also sits in “discounted territory” relative to its historical quantile distribution (getting close to deep value)

Quantile 30 meaning Bitcoin has been higher 70.0% of the time historically and lower 30.0%.

The 2024-2025 rally never hit a euphoric peak (especially in hard money terms, and is actually break-even over 5 years)

Force #2: Difficulty Growth Is Slowing

This one surprises people.

ASIC efficiency approaches physical limits.

The industry moved from 150 J/TH to 15 J/TH over the past decade.

Getting from 15 J/TH to 10 J/TH is much harder than getting from 150 J/TH to 100 J/TH.

We see this in the data.

Difficulty growth rate shrinks each epoch.

Difficulty is up ~ 75% since the April 2024 halving.

If this trend continues, difficulty will increase ~ 167% total in Epoch 5, or roughly 2.1% compounding monthly.

If this trend holds, difficulty could increase 30-40% in 2026.

Compare that to a potential 86%-133% price increase.

The math starts working in miners’ favor.

Force #3: AI/HPC Demand Competes for Power

This is the wildcard most people miss.

AI data centers need massive power. They pay premium rates. They sign long-term contracts

This creates competition for the same power that mining projects need.

Some mining projects will lose their sites to higher bidders.

Others will convert to AI/HPC entirely (IREN and CIFR)

The result?

Fewer new miners come online. Difficulty growth slows further.

The miners who secure good power positions gain a structural advantage.

What Could Go Wrong

Let me be direct about the risks.

Scenario 1: Price stays flat or drops. If Bitcoin trades sideways through 2026, the thesis breaks. Miner keep capitulating. Hashprice stays compressed. Miners on the margin exit.

Scenario 2: Difficulty spikes anyway. New chip breakthroughs or massive capital inflows could drive difficulty higher than expected. The price-difficulty dynamic stays unfavorable.

Scenario 3: Regulatory headwinds. Energy policy changes, mining bans(could be also be a tailwind), or tax treatment shifts could alter the situation for U.S. miners.

Even with these risks, and a hyper conservative outcome, it looks like an information advantage.

This seems to be an upcoming change nobody is paying attention to.

The Actionable Framework

So what do you do with this information?

If you’re evaluating mining entry:

• Calculate your breakeven based on your power cost and machine efficiency

• Model scenarios with various price & difficulty growth

• Ask: does my position survive the downside and capture the upside?

I made a tool for this:

Bitcoin Mining Profitability Analysis

Fill in the inputs (the most important for FORECAST will be “BTC Monthly Growth %” and “Difficulty Monthly Growth %”)

HASHPRICE dynamically calculates profitability.

FORECAST shows a month by month breakdown, with Mine & Hold and Mine & Sell scenarios for the term.

You can also compare Mine vs Buy.

If you want a demo how to use this modeling tool, feel free to email me at billy@simplemining.io

If you already mine:

• Consider expanding your fleet

• Upgrade to sub-15 J/TH machines if your capital allows

• Maximize uptime. Every percentage point matters for payback period.

• Use the tool to determine mining term.

The entry point framework:

• Hashprice low = potential value entry

• Hashprice elevated = pay a premium

We’re at all-time lows.

Could it get worse? Yes.

But on-chain data shows clean bounces off the average acquisition price of active investors (True Market Mean)

This level acts as strong support.

The Bigger Picture

Bitcoin’s production cost creates a floor.

The Cambridge Electricity Consumption Index estimates global average miner cost around $80,000 per BTC (5 cents per kWh, 30 J/TH efficiency, excluding overhead)

Miners above and below this exist.

But the network has a cost structure. Price tends to respect it over long horizons.

Add the macro context: PMI below 50 suggests economic contraction.

Yet Bitcoin rose 400% from 2023 to 2025 through a flat business cycle.

The asset decouples from traditional correlations.

2026 setup:

price appreciation meeting slower difficulty growth, AI/HPC constraining new mining capacity, and broader macro tailwind in the business cycle.

The conditions for a golden window are forming.

TLDR

• Mine vs Buy depends on price growth vs difficulty growth

• Three historical windows (2019, 2020-2022, 2023-2024) are the blueprint

• 2025 shows the opposite: difficulty up 36%, price down 6%

• These compression periods historically precede expansion

• 2026 price projections: $164k-$205k (86-133% growth)

• Difficulty growth slowing due to ASIC efficiency limits

• AI/HPC demand constrains new mining capacity

• Hashprice suggests value entry point

• This tool helps you model these scenarios

The best time to buy a miner was before the last hashprice run.

The second best time is the day before everyone else realizes the next one is starting.

Have a good weekend

- Billy Boone

Let’s step back and look at the big picture:

The headline number everyone’s heard is $38 trillion in U.S. national debt.

But the more important detail is the speed.

The U.S. has added $10 trillion in under 5 years.

And is now adding about $1 trillion every 180 days, blowing through every flimsy debt ceiling.

Yes, it’s true that the U.S. has ‘always been in debt’ and that the world reserve currency system is built on exporting Treasuries.

But there’s a problem:

The debt is growing faster than the economy, faster than tax revenue, and faster than the government can service it without creating more money.

The system is now structurally dependent on debasement.

This is what people mean by “fiscal dominance”

The U.S. government now spends more on interest payments than on national defense.

And unlike other spending categories, you can’t vote interest payments down.

They compound automatically.

Every dollar of new debt requires more interest, and that interest must be financed with even more debt.

This is the negative feedback loop.

Elon Musk has even said the U.S. either fixes this or goes bankrupt.

Historically this is how empires collapse.

Not from lack of power, but from a destruction of the currency.

Average lifespan of a fiat currency is about 35 years.

US Dollar is on year 54.

So how can the U.S. treasury escape bankruptcy?

There are really only four ways a government can service a debt this large:

1. Cut Spending: Politically impossible at scale. Entitlements are 70%+ of the budget. No politician gets re-elected by cutting them.

2. Taxes & Tariffs: Helps at the margin, but nowhere near enough to close a multi-trillion-dollar shortfall.

3. Grow the economy faster than the debt: Historically ideal, but mathematically unrealistic when debt growth is compounding faster than GDP.

4. Borrow More: Issue more Treasuries. This is easiest path, but it only works if interest rates stay low.

This requires cooperation with the Federal Reserve.

If the Federal Reserve can leverage monetary policy by lowering rates AND add treasuries to their balance sheet, the outstanding debt can effectively be devalued

The risk is hyperinflation, but there is no other choice given bankruptcy is the alternative.

This is what macroeconomists mean by “nothing stops this train”

When the Fed is forced to cut rates and expand M2, liquidity rises.

Every easing cycle since 2008 has sent hard assets higher: gold, Bitcoin, and blue-chip equities.

This is why Bitcoin doesn’t just go up randomly. You can see strength when rates fall.

At the same time, global trust in the dollar is weakening.

Central banks are exchanging Treasuries for gold.

This is what people now calling the “debasement trade.”

This is the macro picture.

It would paint a favorable performance for Bitcoin.

But what about mining specifically?

What will determine profitability?

Two sets of variables: market conditions and capital conditions.

Market conditions are external.

Capital conditions are internal.

Market conditions can me summed up in one number: Hashprice

Hashprice tells you how much revenue a miner can expect per unit of hashpower.

Looking at this chart, you might think: ‘Profitability peaked in 2017 and has fallen ever since.’

And in nominal terms, that’s true.

Miners were earning over $3 per TH per day.

But the context matters:

• Bitcoin price went up over 1,500% in 2017 alone.

• 2017 machines were ~10 TH/s

• Today’s machines are ~ 400 TH/s

• The subsidy was 4x larger

• Competition (difficulty) was a fraction of today

It was the perfect profitability storm: massive price appreciation, low competition, and high issuance.

Hashprice today is lower because the market is more efficient and industrialized.

To see 2017 like movement again, price would need a very large move in a short period of time.

In terms of capital conditions, the single most important variable is power cost.

For example, if your power cost is 0, you can mine profitably forever.

U.S. electricity costs adjusted for inflation have trended down over decades.

(this could change with AI/HPC demand)

Industrial-scale miners typically pay much less than retail users.

Average industrial mining rate is around $0.05/kWh, compared to $0.15/kWh for residential users.

That spread is the difference between profitable and unprofitable mining.

To put this on a scale, it would look something like this:

At one end, you’ve got bear-market conditions: high power costs, poor efficiency, and downtime.

At the other end, in bull-market conditions: low power cost, good efficiency, and high uptime

If we use current market conditions, and a mid tier miner like the S21, at $0.08/kWh, you are mining Bitcoin at a discount (pay $6 in electricity to get $9 of Bitcoin)

If this machine currently cost $3,000 and has a 95% uptime, fixed payback period will be a little less than 3 years.

Could be faster or slower depending on market conditions.

So we can see there are some profit incentives to Bitcoin mining. Who are the major miners taking advantage of this?

These are the top ten publicly traded Bitcoin mining companies in the world, ranked by market cap.

You’ll notice that 6/10 are USA, highlighting how it is the institutional hub of the mining industry.

Some of these firms are valued for their treasury strategies, growth prospects, or ai vision.

Not just the blocks they produce.

That said, market cap doesn’t always equal hashrate.

So here are top 10 mining companies based on hashrate:

We can see mining can be profitable, and who the key players are, but what does the future look like? (the framing question in the back of every investors mind)

Let’s look at the headwinds.

One of main areas of resistance is going to be rising energy costs.

According to the U.S. Energy Information Administration, electricity prices are expected to outpace inflation through 2026.

At the same time, demand from AI/HPC is accelerating.

Projected to 3.5x by 2030:

For many miners, this can create higher average power prices, tighter grid supply, and more competition for affordable energy.

Here is an interesting example

This could be good for suppressing difficulty, but not so good for miner operational expenditures.

And since power cost is the #1 driver of profitability, this dynamic could separate efficient operators from everyone else.

In the case of Simple Mining, this risk is minimal due to vertical integration (PPA leverage) and integration with renewables (65% wind power), which somewhat need miners.

Headwind #2: Tariffs and Logistics

Since nearly all mining hardware is imported, U.S. miners are exposed to tariffs, export restrictions, and shipping risk.

Most ASIC supply is concentrated in China, Taiwan, and South Korea.

You can see the geopolitical bottleneck in this chart:

Bitmain is practically a single point of failure for any companies sourcing all machines through them.

This could directly raise CAPEX per terahash, making it harder for U.S. miners to expand or replace fleets.

And unlike other industries, miners can’t just raise prices or produce more Bitcoin

So when hardware costs rise, margins get squeezed.

Headwind #3: Negative market/migration conditions

This chart shows Lightning Network capacity, which represents Bitcoin’s Layer 2 transaction volume.

If Lightning and similar scaling solutions continue to grow, fewer transactions might settle on the base layer, which means lower fee revenue for miners.

At the same time, the block subsidy (currently 98% of miner income) will drop another 50% in 2028.

If Bitcoin’s price doesn’t appreciate to offset that decline, weak miners will be flushed out.

In that environment, the strategic edge will belong to miners who control their own power, energy delivery, and policy outcomes.

And that’s exactly what we’re already seeing among the best-performing public mining equities today.

Now this headwind could also turn itself into a tailwind, depending on how demand for final settlement on Bitcoin’s base layer changes in the coming years.

When most people think about Bitcoin’s value, they think about the coins themselves.

But there’s a second form of scarcity that will become just as important:

Blockspace

Or the limited room inside each block where transactions are permanently settled.

Roughly one block every 10 minutes, about 4,000 transactions per block, which means the absolute ceiling is only ~210 million transactions per year.

So If all 8 billion people on Earth wanted to make a single base-layer transaction, it would take almost 40 years.

And when demand for settlement exceeds supply, fees rise and accrue to miners.

But it’s hard to model any meaningful transaction revenue into future miner profitability given how event driven it is.

So just something to keep in mind.

But what about the tailwinds?

Historically, a nice tailwinds for miners is always price significantly outpacing difficulty:

But this knife can cut both ways. YTD it’s been a headwind. Difficulty is up OVER 40% YTD

Meanwhile, price is up 8% YTD

This is why hashprice is in the gutter.

But, if we see something similar to 2017 and 2021 take shape in 2026, then this is a major tailwind.

And as AI/HPC projects compete for data center capacity, new mining site development could slow further, putting a lid on difficulty growth.

The other future tailwind, and a wild card, is the sovereign bid.

President Trump has said he wants America to become the ‘Bitcoin mining superpower of the world.’

and that he wants Bitcoin ‘mined, minted, and made in the USA.’

His sons, Eric and Donald Trump Jr., founded American Bitcoin: a strategic mining company with the mission of ‘building America’s Bitcoin infrastructure backbone.’

In other words, own block production and the settlement rails bitcoin moves on.

And if the U.S. begins to nationalize hashrate to maintain currency dominance in a post-Petrodollar world, mining would be treated as a strategic imperative rather than a private enterprise.

You would certainly want to have some exposure to mining in this case.

Given all of this information, every investor must decide how to strategically fit Bitcoin mining in their portfolio.

There are 3 primary methods:

1. Mining equities

2. Hosted mining

3. DIY mining

On the equity side, performance has been explosive.

Several are up over 100% YTD ($IREN, $CIFR, $BITF)

Or diversified exposure through a mining ETF like WGMI, which is up 158% year-to-date.

The CoinShares $ WGMI mining ETF is up over 150% YTD.

On the hosted mining side, you get direct exposure to the hashing machines themselves.

Direct transaction fee exposure, difficulty-price dynamic exposure, ASIC equipment exposure, Bitcoin mining pool vote, potential privacy benefits, etc.

Think of it as becoming the CEO of your own mining company.

You purchase the hardware and run it at a professional hosting facility.

The host manages power delivery, uptime, maintenance, and repairs, while you retain ownership of the machines and the mined Bitcoin.

At Simple Mining, for example, clients run machines at an all-in rate of 7 to 8 cents per kilowatt-hour, which as we mentioned previously, is currently profitable.

Hosted mining also opens the door to financing and tax advantages like 100% bonus depreciation, which can dramatically improve after-tax returns.

The final path is DIY mining. Either running a few machines at home or building your own industrial site.

For most people, home mining isn’t doesn’t make any sense from a profit perspective due to high residential power rates and scaling limitations.

If you go bigger and want to build your own site, the capital expenditure can reach $2 million per megawatt once you factor in infrastructure, transformers, containers, and permitting (also something Simple Mining offers).

So there you have it: macro environment, Bitcoin mining profitability, competitive landscape, future headwinds + tailwinds, and the allocation methods.

This letter is the cornerstone for readers: you, as a capital allocator, have to decide how to allocate. This should give you some food for thought.

Personal, as a Bitcoin mining investor, I have exposure to all 3 methods.

Hope this helps.

P.S.

I am doing a weekly tax Q/A with Bitcoin mining tax expert Mike LaLuna.

If you have any specific mining tax related questions, reply to this email, and we can cover it.

P.P.S

I am planning on paywalling this newsletter in 2026 (It will be free for Simple Mining clients) and the focus will be similar to what was covered in this letter.

So fewer broad educational topics (which I will publish on Simple Mining Insights), and more direct content related to investing in the Bitcoin mining sector.

Have a good weekend✌️

- Billy Boone

They watch Cathie Wood. They watch ETF inflows. They buy when they see lines on a chart predicting $444k.

This perspective bleeds capital in sideways markets. You sell at the bottom when you need liquidity. You miss the regime-level moves because you’re watching the wrong indicators.

Watch sovereign nations instead.

Here is an interesting thesis to think about:

Foreign Holders of US Treasuries Just Hit a 25-Year Low

In the 2000s, foreign buyers held over 40% of US Treasuries. Today that number sits around 25%.

The bid is vanishing.

Central banks in China and Russia stopped funding US deficits and started stacking gold reserves.

This matters because for 50 years, Treasuries replaced gold as the world’s reserve anchor.

Here’s what comes next.

How to position for the biggest regime reset since 1971

You need to understand three moves happening right now:

The Treasury Peg Is Breaking. The US carries $37 trillion in debt against a $25 trillion gold market where most bars sit locked in vaults (allegedly).

We can’t collateralize our way out with an asset our rivals have been stacking for a decade. The gold card has already been played.

Bitcoin Becomes The Release Valve. America controls 50-70% of global hashrate. BlackRock’s Bitcoin ETF holds over 750,000 coins. Strategy operates as a proxy accumulator. This gives U.S. the auditability edge against BRICS gold narratives.

Miners Turn Into Infrastructure. MARA, RIOT, CLSK, IREN, CIFR aren’t speculative stocks anymore. They’re the strategic settlement layer. If tariffs force ASIC manufacturing onshore, the US locks the supply chain from chips to custody to blockspace.

This is when Bitcoin starts acting like sovereign collateral.

Here’s Why You Should Reframe Bitcoin As Monetary Policy

This is a rerun of the Nixon playbook.

“We must protect the position of the American dollar”

This is the goal.

In 1971, Nixon closed the gold peg to escape foreign claims on Fort Knox.

Today, Trump uses tariffs as deflationary policy while the Fed prepares to cut rates. Liquidity floods into assets, not groceries. This is how you weaponize monetary policy without triggering CPI inflation.

Normally, tariffs are inflationary (they make imported goods more expensive).
But if tariffs are structured and targeted in a way that reduces demand for foreign consumer goods and shifts production back domestically, they can act like a “consumption tax” that dampens spending on imported staples.

That has two effects:

• Suppressed consumption in CPI basket (groceries, electronics, etc. may see less demand or substitution).

• Relative disinflation in the reported CPI, even if asset prices are going up elsewhere.

In other words, tariffs shift the pressure point: they don’t flood everyday goods with money, they restrict them.

What This Means For Your Capital Allocation

The opportunity window is narrow. Hashrate consolidation accelerates as tariffs may force ASIC production onshore. Eyes are on Proto miners.

Trump has already said, “I want Bitcoin mined, minted, and made in USA”

Custody concentrates in US-regulated entities. The infrastructure builds in silence because monetary wars don’t announce themselves.

Here’s What Changes in Your Portfolio:

You allocate to Bitcoin as base layer collateral, not speculation.

It offers protection against sovereign debasement that shows up in asset prices, not CPI. You add exposure to US miners because they control the rails of the new regime.

Better yet, you become the CEO of your own mining company with Simple Mining.

Cambridge hashrate data shows US dominance approaching 80%.

USA controls the settlement layer. Fed funds rate cuts become bullish instead of bearish because liquidity flows into asset repricing. Treasury auction results matter less than hashrate concentration.

Position Sizing By Conviction Level:

• Conservative: 10% Bitcoin, tracking hashrate and custody metrics

• Moderate: 10-40% Bitcoin plus 5% allocation to US mining

• Aggressive: 50+% Bitcoin, 10+% miners, rebalancing as hashrate crosses 80%

The math supports larger ranges than traditional portfolios because it is more based on a black swan event.

If even 1-2% of the $300 trillion global collateral base migrates to Bitcoin, it’s $150k-$300k per coin.

If Bitcoin absorbs gold’s $25 trillion market cap, that’s $1.2 million per coin.

If it becomes 5-10% of sovereign reserves, $2-3 million becomes the baseline.

Food for thought.

The Pattern Playing Out In Real Time

Look what happened after China banned mining in 2021.

Hashrate migrated to the US.

Now we host 75% of global mining power.

Meanwhile, BlackRock accumulated over 750,000 BTC through ETF inflows in under two years.

Strategy operates as a public accumulation vehicle adding roughly 30,000 coins per quarter since 2020.

You see three parallel moves.

First: hashrate consolidation under US jurisdiction.

Second: custody concentration in regulated US entities.

Third: ASIC supply chain relocating onshore through tariff pressure.

Coincidence? Unlikely.

Powell’s term as Fed Chair ends May 2026.

Trump just nominated Stephen Miran to the Fed Board of Governors.

In his first vote, Miran dissented, arguing rates are 200 basis points too high.

This signals the composition shift. Trump wants dovish voices who frame Bitcoin as collateral infrastructure, not speculation.

This all shows up in asset repricing. Bitcoin. Miners. Real estate. Equities.

What Can Go Wrong

No strategy plays out perfectly. Here are some bottlenecks:

Political Risk: An opposing administration could slow the pace with climate regulations targeting miners or consumer protection rhetoric around Bitcoin. But they won’t dismantle custody infrastructure or hashrate concentration that preserves dollar dominance. The tools might get different labels, but the strategy continues.

Coordination Failure: If foreign rivals build their own Bitcoin mining infrastructure faster than expected, US dominance erodes. But the window for competitors is closing (if not already closed)

Adoption Resistance: If banks and institutions refuse to treat Bitcoin as tier-1 collateral, the transition stalls. But we’re already seeing Basel III/SAB 122 evolve to accommodate digital assets. The banking system adapts or gets replaced by stablecoin settlement rails.

Geopolitical Escalation: If BRICS countries accelerate their gold-backed settlement systems, it creates a parallel monetary structure. But gold loses to Bitcoin in a digital-centric economy.

The risk isn’t owning Bitcoin, it’s not owning any.

The Bottom Line

The new system is already building around Bitcoin infrastructure under US control.

You’re watching the biggest monetary shift since 1971 unfold in real time. The market won’t price this in advance because markets don’t price regime change.

They price business cycles, earnings, and sentiment. They don’t price sovereign nations restructuring the entire collateral base of global finance.

Here’s a question: Do you position for the world as it was, or the one that will be?

The old system is failing. The hashrate consolidation tells you what replaces it.

Everything else is noise.

P.S.

Simple Mining rolled out miner financing yesterday:

Email sales@simplemining.io if you’re interested.

P.P.S.

We’re doing the largest Bitcoin mining giveaway of all time.

S21+ hydro AND S21+ air cooled.

$20,000 value.

Two winners.

Refer a winner, you also win.

And if you don’t win either, everyone who enters will win a bonus gift after giveaway ends (7 days from now).

Here is the link to enter

Have a good weekend.

Market sentiment noticeably shifted yesterday.

I had a conversation about $1 million Bitcoin price yesterday.

It made me think about the timeline.

I remembered this ARK report:

Food for thought.

You know what keeps me up at night?

Watching investors dump $100K+ into miners while completely ignoring one of the most powerful financial tools:

Business credit.

But first,

This message, including any hypothetical scenarios described, is provided for informational and illustrative purposes only and does not constitute professional advice. These scenarios are hypothetical and are not indicative of any specific outcome or past performance. Results will vary based on individual efforts and external factors. I make no promises or guarantees regarding your investment success.

Please note that individual successes are influenced by personal abilities, market conditions, and other external factors. I, nor Simple Mining, assume no responsibility for decisions made or actions taken based on the content of this email. Always consult with qualified professionals before making significant business decisions.

Here's the question that changes everything:

What if you could mine Bitcoin using the bank's money at 0% interest, write off 100% of the purchase, and pocket all the Bitcoin?

Whatever the bank lends you at a favorable rate can be viewed as leverage.

More Bitcoin and more exposure than you could have otherwise achieved.

Sound too good to be true? It's not.

It's exactly what I have seen countless miners do.

They save millions in taxes while accumulating Bitcoin at a 50% discount to spot price.

Plus, the mined Bitcoin has historically shown a favorable CAGR.

The longer the exposure, the better.

The Framework Nobody Talks About

Let's get one thing straight. Banks want to lend you money. They make billions doing it.

But most people approach credit wrong.

They apply randomly, they mix personal and business, and IF they do get approved, they purchase LIABILITIES.

Investing Rule:

The strategy is to build systematic credit stacks that unlock $100K+ at 0% APR.

Think of it like building a house. You need the foundation first. Then the frame. Then the walls. Skip steps, and the whole thing collapses.

The Personal Credit Foundation

Your personal credit score is your ticket to the game. Banks won't touch your business applications without seeing 720+ on your personal file.

Here is what makes up your score:

Optimize these factors.

Here are a few tips:

1) The Authorized User Hack

Find a family member with stellar credit. Get added as an authorized user on their oldest card. You inherit their payment history instantly. No family? Rent a tradeline before application. Your score jumps 50-100 points overnight.

2) Create Your LLC Today

Register in your home state. Choose something like consulting as your business type. Your LLC needs history, so start it now, even while building personal credit.

3) Get Checking Accounts

Open personal and business checking accounts at each bluechip bank. Fund them with whatever you can. The more the better. Banks track your relationship length. Start the clock now.

This is where discipline pays off. You want to have several personal credit cards to show responsibility.

The easiest place to start is the bank you already use (you want one of the bluechip national banks: Chase, BofA, US Bank, Wells Fargo, etc.)

Use it for everything. Pay it off before the statement cuts. Your utilization reports at 0%. Your score climbs.

As your score increases, apply to more prestigious cards.

You want to have about four top-tier personal cards.

But no more than five card applications in 24 months.

The Business Credit Map

Your personal foundation is set. Multiple cards. $40k+ in limits. Perfect payment history. Now the secret sauce.

You can start with any bluchip bank you already have personal + business checking with, but American Express is usually the best place to start.

• Business Platinum (charge card, no limit)

• Business Cash (0% for 12 months)

• Business Plus (0% for 12 months)

Apply same day. One inquiry. Three cards.

If you wanted to get more cards from another bank like Chase (if you already have personal + business checking with them), you would need to get your hard inquiries removed first.

You can call them and ask to remove.

Pro Tip: Submit application through a human. Your relationship manager submits applications directly to underwriting.

So now you have ~$50k+ for free for 12 months.

You can’t buy Bitcoin directly on an exchange with a credit card.

But you can buy a miner, plus you can write off the whole thing.

The Mining Math

We will use the new hydro-cooled miner at Simple Mining as an example.

Here are the details under current market conditions:

This machine costs about $11,000 currently.

So the new line of credit could purchase ~ 4 machines after sales tax.

Section 179 bonus depreciation means 100% write-off year one. So your effective cost is lower because you can now pay $50,000 less in year-end taxes.

Under current market conditions, if nothing changed for a year, these 4 hydro miners would produce ~ $13,000 worth of Bitcoin (conservative 90% uptime).

The catch is you need to pay back the $50k in 12 months.

You do not want to be investing in something earning 30% ARR while paying 30% APR.

This is how the bank would win.

The Balance Transfer

Those 0% periods end eventually. But new offers never stop coming.

After 12 months, your past applications for the first round of funding have aged.

If they haven’t, you can call and ask for them to be removed.

You need a new round of funding to float the rate.

This is where the balance transfer comes in.

There are several options and promotions top-tier banks offer.

For example:

“Transfer AMEX balances to new Citi cards (0% for 21 months)”

“Transfer Chase balances to new Capital One cards (0% for 18 months)”

This allows you to move anything outstanding at the end of 12 months to a fresh line with 0% APR for another 12+ months.

Some miners have rolled balances for 5+ years. Never paid a dime in interest.

The banks keep sending offers.

You can, in theory, “kick the can down” the road forever.

The LLC Factory:

Create multiple LLCs. Each gets its own EIN. Each builds its own credit. LLC #1 mines Bitcoin. LLC #2 mines Bitcoin. LLC #3 mines Bitcoin.

You get the idea. It’s the ultimate mining flywheel.

But what about the risks?

The nice thing about business credit vs personal credit is that it doesn’t impact your personal credit score.

You can apply to as many cards as you’d like, and those hard inquiries won’t negatively impact your score.

Also, business credit has no credit utilization, which makes up 30% of personal score.

The ultimate risk is the mining investment imploding.

Deep bear market. A massive natural disaster destroys your capital with no insurance. Bitcoin fails.

That is the biggest risk. Then your mining business has to file for bankruptcy.

Remember, you’re earning in Bitcoin terms.

If you can make minimum payments out of pocket for 12-36 months (1% of outstanding balance, so $500/mo on $50k), you keep exposure to Bitcoin’s CAGR, and the mined Bitcoin alone could eventually outpace the debt burden.

Ultimately, it depends on if you are bullish on Bitcoin.

Leveraging fiat-denominated debt to go long Bitcoin is the trade of the century.

This is how Saylor brought Strategy from a $1B company in 2020 to a $93B company in 2025.

Your Hypothetical Action Plan

Week 1-4:

• Get personal credit 700+

• Create LLC

• Open personal + business checking with all bluechip banks (add funds)

Months 2-3:

• Apply for 0% APR business credit

• Apply with human account manager for best results

• Receive first round of funding

Months 4-12:

• Use funding to purchase Bitcoin miners

• Write off 100% of purchase to capture bonus depreciation

• After 12 months, balance transfer to new round of funding.

The banks give you the money. The government gives you the write-off. Bitcoin gives you the upside.

This should not be taken as investment advice or associated with the views of Simple Mining.

This is a thought experiment and includes hypothetical scenarios.

Any actions taken as a result of this information will vary and can result in serious loss.

There are no promises or guarantees.

This is purely educational information I found interesting.

Have a good weekend✌️

FedWatch is currently predicting 87% chance of a rate cut in 20 days.

90% S&P 500 stocks recently closed higher than the day before on the NYSE.

This has never happened before.

There were two historical instances of 85%, and both kicked off multi-year bull runs.

What does all this mean?

The macroeconomic environment is bullish, and Q4 is around the corner.

Q4 has historically had the highest average BTC gains.

You just bought a Bitcoin miner.

Now you're wondering how long you should run it before rotating your position.

If you’re also wondering how long your miner will last and remain profitable, refer to this letter I sent out last month:

From the data I have seen, and if you are mining at 7-8¢/kWh, it is a good rule of thumb to sell your miner before it becomes a paperweight.

Why is this?

Take the S19 as an example.

In May of 2020, an Antminer S19 cost ~ 0.22 BTC ($2100)

Since April of 2024 halving, the Antminer S19 has not been profitable.

From 2020-2024, with 2% downtime & fees, the S19 mined ~ 0.607 BTC

The cost from 2020-2024 was roughly 0.31 BTC at 7¢ per kWh

The S19 is now essentially a paperweight.

So total profit over 4 years was 0.077 BTC (0.607 - 0.53)

This could have been DRAMATICALLY IMPROVED if the S19 were sold at any point when it was still competitive and profitable:

This chart shows the price per TH of the S19 since it came out in 2020.

Based on this chart, the optimal time to sell the S19 would have been between December 2020 and October 2022.

The Question That Keeps Miners Up at Night

When exactly should you pull the trigger on selling or upgrading your mining equipment?

The answer lies in understanding three interconnected forces:

1. Hashprice cyclicality

2. Miner cost basis

3. Four-year cycle.

Understand these, and you’ll have a much clearer picture of when to double down and when to be reserved.

Understanding the Mining Hardware Game

Bitcoin mining isn't a technology business. It's a commodity business wearing a tech costume.

Think of your miner like an oil drilling rig.

The rig itself matters less than the price of oil (Bitcoin) and your cost to extract it (CAPEX + OPEX).

Just as oil companies don't replace their rigs every time a slightly more efficient model appears, successful miners understand that hardware turnover is about market cycles.

The key metric here is hashprice: how much you earn per unit of computing work.

And right now? We're in a cold basement.

The Data Tells a Story

Both miner prices and hashprice sit at historical lows.

Here is the Miner Price Index:

The 2021 hashprice bull run was euphoric. Miners made a killing.

But what is the current situation?

Flat and declining.

Machines are trading at discounts not seen since the 2018-2019 “crypto winter.”

Why is this the case?

1) April 2024 halving 2) Hashrate/difficulty is at all-time highs 3) Price is lagging

This is the most telling chart:

16 months after 2020 halving Bitcoin price was up 444%

16 months after 2024 halving (today) Bitcoin price is up 75%

If this epoch were on pace with the performance of last epoch, the Bitcoin price would be well over $300k.

So we know things are not overheated.

We also know we’re not at rock bottom (rampant miner capitulation).

CoinShares reported the average miner cost basis in Q3 2024 was around $55,000 per coin.

It is now likely closer to $65K.

When Bitcoin trades below $65K, miners start bleeding.

Machine prices collapse as operators liquidate to cover costs. When Bitcoin climbs above this threshold, especially well above it, miner prices surge as profitability returns and FOMO kicks in.

Past Cycles Reveal Future Opportunities

Mining hardware has historically followed a “predictable” four-year rhythm tied to Bitcoin halvings:

Year 1 Post-Halving (where we are now): Hashprice crashes as block rewards get cut in half. Weak miners capitulate. Hardware prices bottom out 6-12 months after the halving. This is the accumulation window.

Year 2-3: Bitcoin typically enters a new bull phase. Hashprice recovers despite increasing network difficulty. Miner prices surge 3-10x from their lows. This is the distribution window.

Year 4: Approaching the next halving, uncertainty creeps in. Smart miners start rotating out of older equipment that won't survive the next reward cut. This is the rotation window.

If this pattern continues, we're currently in the accumulation zone following the April 2024 halving.

Here is an interesting chart h/t :

This would suggest that Bitcoin “cycles” are not based around halving epochs.

Bitcoin price performance is more impacted by adoption trends, global liquidity, and capital markets structure.

But we also can’t completely ignore the halving effects.

The halving certainly has a part to play in the supply/demand dynamic of Bitcoin.

Logically, fewer daily Bitcoins issued combined with increasing demand, the price goes up.

The Macro Picture Changes Everything

Bitcoin mining hardware is really a leveraged bet on three things:

1. Bitcoin price appreciation

2. Hashprice long call option (bet hashprice will go up)

3. Fiat currency debasement

In this era of fiscal dominance, the setup for miners improves dramatically over a 4-10 year horizon. Short-term hashprice pain masks long-term structural advantages.

Consider this:

Every previous cycle, people declared mining "unprofitable forever" at the exact bottom. They extrapolated current hashprice into infinity, ignoring that price appreciation continues to outpace upward difficulty adjustments.

Your Action Framework: Two Scenarios

Scenario 1: You own older generation miners (S19 series or older)

Your machines are right on the profitability margin at 7-8¢ power cost, barely above water.

If you should sell/upgrade depends on how you want to be positioned for bullish price action.

You may have already recouped your CAPEX, and any mined surplus is pure profit.

This will increase with hashprice, but will not have as much leverage as a new-gen machine (you will mine more Bitcoin with a more powerful unit).

Under current market conditions, it is difficult to try to sell these older S19 machines.

At Simple Mining, there is a “Miner Swap & Save” program.

You can trade in your older equipment hosted with Simple Mining and receive credit towards the purchase of a new machine.

If you’re interested in this program, email sales@simplemining.io

Scenario 2: You own current-generation miners (S21 series, hydro miner)

These machines are deep “in-the-money.”

You can mine profitably all the way down to $60K Bitcoin price.

And we know hashprice nor miner price index is overheated compared to historical numbers.

With tailwinds ahead, you want to be plugged in and hashing.

Only sell if:

• You need immediate liquidity

• Someone offers you 2x what you paid (unlikely at current prices)

• You want to upgrade for more leverage

Say for example, you have an S21 200T and you decide to sell to upgrade to S21+ hydro 395T.

The S21+ hydro would return double the daily BTC revenue vs the regular S21.

Otherwise, this is your accumulation period. Consider buying more machines at these depressed prices.

Tools for Timing Your Decision

Track these metrics to keep a pulse on mining profitability:

Hashprice index:

When this increases, miner profitability increases.

Miner price index:

The Puell Multiple:

This indicates miner revenue extremes.

Red means miners are earning a high multiple compared to their 365-day average.

Green means miners are earning a low multiple compared to their 365-day average.

Green has historically been a good time to buy, red a good time to sell.

Your own cost basis per Bitcoin mined (know your breakeven).

Depending on your miner model and cost of power, this could vary.

Keeping a healthy profitability margin helps you maintain long-term exposure.

The Bottom Line: Patience Pays

Right now, we're in a buyer's market for mining hardware. Hashprice sits in a valley. Miner pricing is weak.

History shows this is precisely when future mining fortunes built positions.

Your Next Move

The miners who win don't chase the latest technology or panic during hashprice drawdowns. They understand market reflexivity and get greedy when everyone is fearful.

TLDR

• Macro signals are bullish

• You can end up with more BTC by selling your equipment before it dies.

• Hashprice, cost-basis, and market cyclicality determine when you should sell.

• Current prices are depressed (not a good time to sell unless upgrading)

• This is because mining difficulty is up, and price is lagging (vs historical)

• Monitor miner price index, hashprice, and Puell Multiple

• It seems we are in the accumulation phase.

In mining, the money isn't necessarily made by having the newest machines. It's made by having the right machines at the right time.

This is the way I think about managing my mining position.

It’s not perfect, and timing the market is easier said than done (and maybe shouldn’t be done at all)

But if you are serious about accumulating as much Bitcoin as you can, it’s food for thought.

Have a good weekend✌️

Depending on where you’re at in your journey as a Bitcoin investor, the increasing dollars per BTC may bring about varying emotions.

Here is a useful mental framework during these times:

FOMO mindset: Bitcoin = current dollar amount set by the market

Bullish mindset: Bitcoin = sat/dollar parity ($100M/BTC), the market doesn’t know it yet

Bespoke mindset: Bitcoin = global base layer money

This can help in assessing the future value of Bitcoin as a store of value, medium of exchange, and of course, unit of account.

Don’t use the same thinking everyone else is using.

Use the thinking people will be using 10 years from now.

I recently attended a “Financial Freedom Expo.”

The conference had investors from diverse sectors: real estate, lending products, precious metals & resources, insurance and tax solutions, and even investing in TED Talks and nursing homes.

Our Bitcoin mining booth was the only “crypto” company at the expo.

I was asked hundreds of questions.

From boomers and teenagers to financial advisors and gold maxis, you name it.

The most common question:

“So what is Bitcoin mining?”

How would you answer this question?

Go ahead and take some time and reflect on what you would say.

I would give general responses, “Computers solving complex math problems to verify Bitcoin transactions.”

I would also try to give more nuanced responses, “Bitcoin miners search for a number to add blocks to a chain. They earn Bitcoin as a reward for their efforts. This process prevents double-spending and confirms transactions.”

I was mostly explaining it in a dumbed-down version like this:

But something didn’t sit right with me…

The more I thought about it, Bitcoin mining is not “solving complex math problems” at all.

It’s not complex, and by dumbing it down, I am actually taking away from the brilliant simplicity (as applies to many things in life)

In my opinion, less than 1% of 1% of the global population truly understands what Bitcoin mining is (and isn’t)

My mission, and the purpose of this letter, is to increase this number.

What does a Bitcoin miner do?

• A machine/computer is connected to a power source.

• The computer looks for a number in a very large set

• The computer consumes energy to do this.

• The computer gets rewarded with Bitcoin for its efforts

These computers don’t try to “solve complex math problems”

They generate trillions of lottery ticket guesses:

To put the scale into perspective, this is like:

• Searching for one specific grain of sand on the beaches of a thousand Earth-like planets

• Choosing one specific star from all the stars in the observable universe

• Flipping a coin 79 times and getting heads every time

It takes Bitcoin miners 10 minutes to find the number, on average.

This gives you an idea of how many miners are generating these guesses or “hashes"

The winning number is what produces a “block.”

A block is just a batch of Bitcoin transactions.

You can see the data in blocks visualized on mempool.space

Ok, so now we know what Bitcoin miners are technically doing.

But many people will respond to this with,

The reason for Bitcoin mining

The #1 reason these computers do this is to produce blocks.

And the #1 reason to produce blocks is because they are the vehicle by which Bitcoin transactions are confirmed.

If I send you Bitcoin, the only way that transaction gets confirmed is if it is included in one of the purple blocks on the right (refer to mempool image above)

This allows money to be sent and received on the Bitcoin network. Blocks are the way Bitcoin is transferred.

But why do these computers go through all this work to add these blocks?

They have costs to do this (primarily the power consumption).

Because they have an incentive: the block reward.

This is the #2 reason for Bitcoin mining: the issuance of new Bitcoin.

You can get Bitcoin from someone else, or you can get Bitcoin from a block reward.

The block reward consists of the block subsidy (new BTC) and transaction fees (existing BTC paid by people sending Bitcoin)

Here is a useful chart to see the block subsidy paid to miners shrinks over time:

There are currently 19.9 million coins in circulation. Mining is how this number grows. BUT, it can NEVER grow past 21 million (major reason why people like Bitcoin).

So, we know the reason for mining is 1) to produce blocks and 2) release new Bitcoin

But isn’t there a better way to do this without all the energy consumption?

No, because the energy consumption is what BACKS Bitcoin and keeps the record of who owes what to whom, honest.

Bitcoin mining follows a universal principle:

Proof of Work

What miners are technically doing is not the hard part.

It is understanding how this is starkly different from the traditional fiat financial system, which requires NO WORK to produce money.

Why should people work for money that takes no work to produce?

Even worse, work for money that can be PRINTED.

This is why the gold standard existed for thousands of years before corrupt politicians removed Proof of Work from money in 1971 (Nixon Shock)

Gold took work to produce (dig deep holes to find), so people preferred it as money.

Bitcoin is similar, except better suited for a digital society.

Bitcoin miners are REQUIRED to provide PROOF they did the WORK to confirm the integrity of Bitcoin transactions.

This is what secures Bitcoin.

If I wanted to cheat Bitcoin (double spend, censor, etc) and attack its security as a money, I would need to redo all the work miners completed.

I would need to find the grain of sand among thousands of planets and the specific star in the galaxy every 10 minutes for 15 years.

And then I would need to do this work faster than all of the honest miners enforcing the integrity and security of Bitcoin.

Impossible.

I am better off simply being an honest miner. This is how the creator of Bitcoin designed the system.

Here is an excerpt from The Bitcoin Whitepaper:

"Any attacker will find it more profitable to play by the rules."

Meaning, if you are monetarily motivated, you will be better off contributing to Bitcoin mining than trying to cheat the system.

Brilliant.

TLDR:

“What is Bitcoin mining?”

A Bitcoin miner is a computer that consumes energy to generate trillions of guesses to find a specific number.

This number confirms your Bitcoin transaction through a block (batch of Bitcoin transactions)

They do this to secure Bitcoin as global, honest, fair, peer-to-peer money (that nobody can cheat) –

No government, no politician, no billionaire, no central bank, no Federal Reserve.

Bitcoin is money for everyone, and I do my best not to go over people's heads with technical word salad jargon.

Here is a cool chart I found h/t Bob Burnett, a bit more overwhelming but valuable to visualize these concepts:

Have a good weekend✌️

P.S. We are 70% sold through Hydro units, and prices will go up with supply squeeze on rackspace. If you are interested in locking in a hydro slot before Q2 2026, consider reaching out in the next 6 weeks.

52 weeks of Bitcoin mining education content.

I appreciate all of the readers and will continue to improve the packaging and alpha. Feel free to comment if there are any specific topics you would like to learn about.

Here’s to another 52 letters.

You just spent $10,000 on a shiny new Bitcoin miner.

Now you're wondering: "How long until this thing becomes an expensive paperweight?"

The pressing question every miner asks: When will my ASIC stop being profitable?

Here's the uncomfortable truth: Your miner's lifespan isn't measured in years of operation.

It's measured in how long it stays competitive against newer, more efficient machines. And that timeline is shrinking.

What Determines ASIC Lifespan?

Let's clear up a common misconception. When miners ask about "lifespan," they're really asking three different questions:

1. Physical lifespan: How long until the hardware breaks?

2. Economic lifespan: How long until it's unprofitable to run?

3. Competitive lifespan: How long until newer models make it obsolete?

Physical lifespan is dictated by mining conditions and care. Are you running your miner in a hot humid Texas desert or in a cool container in Iowa? What is the cooling method? Are there experienced repair techs monitoring performance 24/7?

Economic lifespan is impacted by power cost, the Bitcoin halving, and the price of Bitcoin (if the price of Bitcoin does what Peter Schiff thinks it’s going to do, your ASIC would be scrap metal).

Competitive lifespan is impacted by difficulty/hashrate growth (how many people are mining Bitcoin?), chip innovation, and ASIC efficiency improvements (are manufacturers constantly making better tech?)

Your miner will likely become economically obsolete long before it physically fails.

NOTE: You could practically run a miner FOREVER with access to 0 cost of power. It would cost you nothing to run it, so you could run it and receive payouts based on its hashrate or solo mine (like what people do with Bitaxe mini miners).

For our purposes, and if you are a client of Simple Mining, your cost of power is $0.07-$0.08/kWh, so we will use this when determining lifespan.

The March of ASIC Evolution

Let's look at how dramatically ASIC efficiency has improved since the beginning.

Here are 3 charts to tell the story:

Notice something?

Chart 1: % improvement in ASIC efficiency is declining

Chart 2: Chips are getting smaller, but at a slowing rate (supports Chart 1)

The chart is also outdated, 2nm chip may be available in 2026:

This is how small we are talking:

Chart 3: Efficiency is plotting towards 0 W/TH

Key point: Each generation brings smaller efficiency gains than the last.

The percentage gains are clearly diminishing.

And this isn't a coincidence—it's physics.

Moore's Law Meets Mining Reality

You've probably heard of Moore's Law:

The number of transistors in an integrated circuit (IC) doubles about every two years.

This applies to Bitcoin mining chips, and we can even see outperformance (100%+ over 2 years)

BUT, two important macro factors:

“Moore’s Law originally predicted transistor doubling every two years, but progress has slowed to about every three to four years”

“Extreme ultraviolet (EUV) lithography is now required for nodes below 7nm, costing up to $150 million per EUV machine”

source

What does this mean?

We're hitting the physical limits of silicon, and it is getting more expensive to create these chips.

A circuit can only get so small.

• Physical limits: We're approaching atomic scales (3nm is only about 15 silicon atoms wide)

• Heat dissipation: Smaller chips generate more heat per square millimeter

• Manufacturing complexity: Each smaller node costs exponentially more to produce

The width of the wiring will eventually become a SINGLE atom, and last time I checked, atoms cannot get any smaller, at least not in this dimension.

Even if you imagine a quantum mining reality using the smallest theoretical items that can carry a binary state (spin of a single electron for computation), there is also a theoretical limit to their density + more heat issues.

All this technical speak to say:

ASIC improvements are facing headwinds, and some level of ASIC commoditization may be on the horizon.

Why should miners care about ASIC commoditization (any one miner is roughly the same as any other miner in terms of efficiency)?

Because the fungibility of miners will extend the profitability window and competitive lifespan.

Forecasting the Next Decade of ASIC Development

Based on current trends and physical constraints, here's what we can reasonably expect:

2025-2030:

• Efficiency improvements: 10-15% per generation

• Focus shifts from node shrinking to architectural, cooling, and firmware optimization

• 2nm chips become standard for top-tier miners

• Alternative materials (graphene, carbon nanotubes) enter testing

2030-2035:

• Efficiency improvements: 5-10% per new model

• Mature technology plateau similar to CPUs today

• Competition shifts to electricity costs and operational efficiency

What does this mean for your S21 or similar current-generation miner? The relationship between Bitcoin price and network hashrate creates a complex dynamic where your miner's profitability depends on more than just efficiency.

Also, in the highly unlikely case that Moore’s Law holds perfectly, ASIC efficiency could reach ~0.24 W/TH by 2035.

Actionable Strategies for Maximizing ASIC Lifespan

For Current Miners:

• Lock in profitable power cost: At $0.08/kWh, the S21+ Hydro is currently profiting ~ $12 per day and is water cooled, so plenty of margin.

• Maintenance: Clean filters monthly, monitor temperatures, replace fans preemptively. Work with a hosted Bitcoin mining company that does this.

• Plan your exit: Know your miner's efficiency threshold and plan upgrades.

For Prospective Buyers:

• Buy efficiency, not hashrate: When choosing an ASIC, prioritize J/TH efficiency and cooling tech over raw TH/s

• Don’t overpay for your machine: How can I tell if prices are overheated? Look at hashprice and miner capitulation.

Hashprice is the single best indicator of when a good time to get a miner is. The wrong time is when hashprice is high (2021 highs). The right time is when hashprice is low.

When are miners capitulating?

The Puell Multiple is the ratio of the daily miner income (in USD) to the yearly average.

When miners are earning less than 60% of their yearly average (the green zone), hashprice is likely low, and the overall sentiment is capitulation (unplug).

The best time to deploy capital is during periods of low profitability, when inefficient miners face problems and exit the market.

Another VERY IMPORTANT point I should make.

actual ASIC depreciation vs book ASIC depreciation.

Meaning, at what rate is your ASIC actually depreciating (10-20% per year, for example) vs at what rate is your ASIC depreciation on the books? (from a tax perspective)

The difference between the two can significantly accelerate payback period.

For example, 100% bonus depreciation is back. Meaning your machine may only lose 10-20% of its market value each year, but you can write off 100% of its value in year 1.

This is a huge value prop for many investors.

TLDR: Key Takeaways

• Physical lifespan: 5-7 years (but rarely relevant)

• Economic lifespan: 2-7 years depending on entry and market

• Efficiency gains are slowing: From 80%+ to under 20% per model

• Moore's Law is hitting limits: We're approaching atomic scales

• Next decade forecast: 3-15% efficiency gains per generation, diminishing over time

• Current-gen miners (S21/M50S): Expect 3-4 years of competitive operation with good power rates

• Monitor hashprice and miner capitulation: aim for < 24 month ROI to succeed in BTC terms

• 100% BONUS DEPRECIATE

Also, in mining, as in investing, the machine that lasts is the one you upgrade before it quits on you. Let the winners ride, cut the losers.

Have a good weekend✌️

We are running an ATH 1st month free hosting credit (up to 10 machines)

*not including marketplace units

Any machines purchased over the next 7 days will qualify.

(This could be $340 in hosting credit for the new S21+ hydro miner)

The market is heating up following a wave of bullish policy and sentiment.

Ever feel like you're always buying Bitcoin at full price?

This is when mining shines over the spot buy.

The Core Thesis: Price vs Hashrate Divergence

The entire bull case for mining rests on one relationship:

When Bitcoin's price grows faster than hashrate, miners print money.

In the last 7 days, price is up 7% and difficulty is down 7%.

Is this the beginning of a 2021-like hashprice bull run?

7 Reasons Mining Beats Buying in Bull Markets

1. The 2X Daily Multiplier (Right Now)

• S21 XP costs: $7/day to run

• S21 XP mines: $17/day in BTC

• DCA $7/day gets you: $7 in BTC

Mining delivers 2.4X more BTC at current prices.

2. Leveraged Upside Without Leverage Risk

Scenario: Bitcoin doubles overnight.

• Your $7 DCA now buys half as much (50% less BTC)

• Your miner still costs $7 but now mines $34/day

Result: 5X more Bitcoin than spot buying.

No margin calls. No liquidations. Just leveraging an electricity rate.

3. 100% Bonus Depreciation is BACK

This allows miners to fully deduct the cost of mining equipment.

Buying $100k worth of miners? Reduce your tax burden by $100k.

This significantly improves IRR outlook.

4. Hashrate Can't Keep Up With Price

Why?

• Spot BTC: Clicks to buy = instant price action

• Mining: Build warehouse → Ship ASICs → Connect power = 6-12 months

During 2021's run, hashprice (mining profitability) increased 580% while many miners were still waiting for equipment.

5. ASIC Prices Are Still Discounted

Current situation:

• Bitcoin: at all time highs ($118k)

• ASIC prices: Still near post halving lows

• Historical pattern: ASICs appreciate 200-400% in bull markets

Remember 2020-2021:

• S19 Pro in Oct 2020: $3,000

• S19 Pro in Oct 2021: $11,000

• Plus it mined BTC the entire time

6. Emotionless Accumulation

The psychology problem with spot:

• "I'll wait for the dip" → Miss the rally

• "It's too high now" → FOMO buy the top

• "Finally, a dip!" → "What if it goes lower?"

Mining solution: Bitcoin hits your wallet daily. No decisions. No emotions. No what ifs.

7. Non-KYC Premium

• Exchange Bitcoin: Full identity verification required

• Mined Bitcoin: No KYC needed (currently)

• P2P non-KYC premium: 5-15% above spot

Bitcoin mined straight from a block has inherent privacy value.

The Variables That Matter

For Mining Success:

• Electricity cost (target ≤ $0.08/kWh)

• Entry timing (prior to hashprice bull run)

• Operational uptime (98%+)

The Math Check: If Daily Revenue > Daily Cost = You're mining at a discount

Current example:

• Daily revenue: $17

• Daily cost: $7

• Discount rate: 58%

The Tariff Wildcard

Coming August 2025 (unless amended):

• Thailand ASICs: +26% price increase

• Taiwan/Indonesia: +22% increase

• Malaysia: +14% increase

Action Steps

1. Calculate Your Breakeven

   • Run mining profitability calculator for investment snapshot

   • Compare to current spot DCA

2. Secure an ASIC early

   • Best: Hashprice bottoms (post-halving)

   • Good: Before major rallies

   • Avoid: Peak euphoria

3. Optimize Taxes

   • Consult with a CPA about depreciation

   • Structure as business entity

   • Deduct expenses

The Bottom Line

Mining vs buying isn't either/or—it's portfolio allocation.

If you are bullish on the price of Bitcoin near term ($200k+), and you believe hashrate will struggle to keep up, you should be mining Bitcoin.

Simple thought experiment:

1. You spend 1 BTC on new-gen machines.

2. Bitcoin price goes up to $200k near term.

3. Machine stack at a discount.

4. Rebalance/liquidate machines around $200k in Miner Marketplace.

5. Net 1 BTC recoup on initial machines + all BTC mined.

6. 1 BTC → 2 BTC

Nothing is guaranteed, but we have seen several clients do something similar.

Remember:

• Spot buyers are price-takers

• Miners are price-makers

Now is certainly not the time to be bearish.

We still have the Patriot Pack available through the end of the week.

Details:

648 Th/s bundle: $10,500

*$627/mo profit, 1.4 year payback

675 Th/s bundle: $10,950

*$646/mo profit, 1.4 year payback

705 Th/s bundle: $11,550

*686/mo profit, 1.4 year payback

*under current market conditions

This is probably the best deal we have ever offered, and it ends this week.

If you’re interested, book a call with Sean or Nick

Have a good weekend✌️

Earlier this year, I wrote a piece on The Debt Problem:

TLDR:

The current U.S. debt according to the debt clock is over $37 trillion.

The “debt ceiling” is the temporary limit Congress gives the Treasury on the debt they can take on (currently $36.1 trillion)

The difference between the actual debt and the debt ceiling is that the actual debt is the amount the U.S. must repay, while the debt ceiling is the cap on the amount the Treasury can borrow.

The problem is overspending. Bills come due, and the goalpost gets moved.

The US has raised this “limit” 78 times since 1960.

The ceiling was hit on Jan. 2, 2025.

The Treasury has been using accounting tricks (“extraordinary measures”) to avoid default.

These measures will be exhausted before September. The limit will need to be raised before then.

Fast forward to today, The One Big Beautiful Bill has passed Senate vote.

This will be a catalyst for $1M Bitcoin and a major incentive for Bitcoin mining.

This is ultimately a spending bill.

It outlines lower taxes and expensive projects, which will increase the "debt ceiling" by ~ $5T.

How will the U.S. pay for this?

Try to keep growth > inflation.

Here is a summary:

• Permanent Extension of TCJA Provisions

Extends the 2017 Tax Cuts and Jobs Act (TCJA) individual tax cuts, including lower tax rates (top rate at 37%), higher standard deductions, and revised tax brackets, set to expire after 2025.

• 100% Bonus Depreciation

Reinstates 100% bonus depreciation for qualified property (e.g., machinery, equipment) acquired and placed in service after January 19, 2025, and before January 1, 2030 (House version) or permanently (Senate version). This allows businesses to immediately deduct the full cost of eligible assets, boosting investment.

• Qualified Business Income (QBI) Deduction

Permanently extends the Section 199A deduction for pass-through entities (e.g., S corporations, LLCs) and sole proprietors. The House version increases it from 20% to 23%, while the Senate keeps it at 20% but adjusts phase-in limits.

• SALT Deduction Cap Increase

Raises the state and local tax (SALT) deduction cap from $10,000 to $40,000 (House) or a lower amount (Senate, possibly $10,000 as a placeholder), with phase-outs based on income. This is a contentious issue, with some House Republicans opposing a lower cap.

• No Tax on Tips and Overtime

Allows deductions for up to $25,000 of tip income and $12,500 ($25,000 for joint filers) of overtime pay for 2025–2028, phasing out for higher earners. Requires a valid Social Security number.

• Car Loan Interest Deduction

Permits a deduction of up to $10,000 for interest on loans for U.S.-assembled vehicles (2025–2028), phasing out for incomes above $100,000 (single) or $200,000 (joint).

• R&D Expensing

Restores immediate expensing of domestic research and development costs for 2025–2029, with options to amortize. Foreign R&D remains subject to amortization.

• Section 179 Expensing

Increases the expensing limit to $2.5 million (from $1.25 million) and the phase-out threshold to $4 million (from $3.13 million) for 2025, adjusted for inflation.

• Child Tax Credit

House version increases it to $2,500 (from $2,000) through 2028, requiring both parents to have Social Security numbers. Senate proposes a permanent $2,200 credit, requiring only one parent to have an SSN.

• Energy Tax Credit Repeals

Phases out or repeals Inflation Reduction Act credits (e.g., electric vehicle, home energy efficiency), with the Senate version allowing slower phase-outs for some projects.

• Debt Ceiling Increase

House proposes a $4 trillion increase; Senate proposes $5 trillion to avoid default by late summer 2025.

• Border Security

Funds a border wall, 10,000 ICE officers, detention beds, and Customs and Border Patrol, with a tax on remittances by illegal immigrants.

• Medicaid Reforms

Introduces work requirements, co-pays for those above the poverty level, and stricter eligibility verification, potentially reducing coverage for millions.

Expands employer-provided childcare and family leave credits, modifies estate tax exemptions (to $15 million), and introduces a new markets tax credit (Senate).

The Senate bill is estimated to increase GDP by 1.1% long-term but reduce federal revenue by $4.7 trillion (conventional) or $3.8 trillion (dynamic) over 2025–2034.

Debt Increase:

Adds $3–5 trillion to the national debt, including interest, over a decade, depending on whether temporary provisions are extended.

This is ultimately bullish for Bitcoin.

We know when $ supply goes up (M2), Bitcoin follows.

Unless there is a fresh wave of demand for USTs, eventually they will end up on the Fed's balance sheet (the entity with the most influence over M2 supply).

Get ready for the next leg up.

What about 100% Bonus Depreciation?

Buying $1M worth of Bitcoin miners?

Deduct $1M off your taxable income — all in year one.

This could put upward pressure on hashrate as the incentive to purchase a BTC-generating ASIC will be much higher.

Now is the time to start moving dry power off the sidelines before the Big Print.

It's hard to know the exact best time to secure a mining position.

But if 100% Bonus Depreciation is an option, it's hard to find a better time to mine Bitcoin.

We are also currently in the process of creating a Miner Financing Program.

This would involve a ~ 50% down payment, with the remainder spread across 20-30 months.

This would allow leveraged exposure to mining if you expect inflation to run hot.

Feel free to shoot us a message if you're interested.

Have a good 4th of July✌️🇺🇸

Yesterday, we launched the Simple Mining Referral Program

If you have found value in our hosted mining service and know others like yourself, this program is for you.

The launch terms are as follows, subject to change:

• You must have access to the client dashboard to generate a referral link/code

• Share your referral link with anyone to purchase miners.

• Both referrer (you) and referee (friend) earn credits for the initial referred sale.

• Earn $100 credit for each $10,000 referred.

• Credit can be applied to monthly hosting bill or qualifying miner purchase

So if you referred a friend who spent $2M on S21+ hydro miners, both you and person you referred would receive $20,000 in credits.

There is also the Referral Leaderboard:

The competition will run every quarter. The top 3 referrers on September 30th 2025 will win:

• Simple Mining Merch pack (3rd place)

• $1000 credit (2nd place)

• 50% off a new miner (1st place)

We are actively making updates to the program logic, and terms are subject to change.

If you have any questions about the program, email billy@simplemining.io

Hashrate was around 950 EH/s on Saturday, June 15th.

It has since dropped ~ 15% to 800 EH/s.

As I'm sure you are aware, around the same time, the U.S. sent bombers to blow up Iranian nuclear sites.

There is a theory going around that Iran was mining Bitcoin near the bombed site:

There is some nuance to understand before jumping to conclusions.

Let's start with how hashrate is calculated.

There is no way to know with 100% certainty what the total network hashrate is at any given point in time.

Hashrate is inferred, not observed.

Hashrate (hashes per second) = (Difficulty level * 2³² ) / 600 seconds

Based on this formula, hashrate is estimated based on the difficulty level and block times.

If blocks are being found faster, then we could estimate hashrate has increased.

If blocks are being found slower, we could estimate hashrate has decreased.

We do know blocks are being found slower, as the difficulty is on pace to adjust lower:

This would be the largest negative difficulty adjustment since the 2021 China mining ban.

If we do get this big of a downward adjustment, then there is a case to be made for a secret Iran mining operation.

This interview would suggest Iran has as much as 2 GW of undercover Bitcoin mining.

The drop has mostly been attributed to summer curtailment.

With summer comes heat, and with heat comes people using their air conditioners.

This means utility providers and power producers need to reroute electricity to keep up with the demand of the grid.

Bitcoin miners voluntarily curtail operations when the grid is demanding more, as they are buyers of last resort.

They have demand response agreements with energy partners to help balance the grid and achieve favorable power purchase agreements.

We can see temperatures are ramping up in Texas, where most of Bitcoin mining takes place:

Summer curtailment has historically been responsible for 2-5% drop in difficulty.

If the adjustment is closer to 10%, this could signal mining infrastucture in Iran may have been disrupted.

Time will tell.

Whatever the main cause is, the bottom line is this is bullish for miners currently plugged in.

A negative adjustment of this size means each individual hash will have greater impact.

Less hash competing for each block reward could mean higher payouts, depending on the pool.

We partner with NiceHash and Ocean to help clients maximize transparency and profitability.

Have a good week✌️

Bitcoin continues to keep the $100k streak alive:

I am personally very bullish on Bitcoin amidst the current market conditions.

Inflation is the problem for everyone, Bitcoin is the solution for everyone.

This video by longtime Bitcoin investor Matthew Kratter provides some interesting perspective:

Every 10 minutes, somewhere in the world, a Bitcoin mining pool (mining pools find 99% of blocks) finds a block worth $300k+ (at the time of writing).

But here's what most investors miss:

How this money gets distributed among thousands of miners reveals one of Bitcoin's most overlooked structural aspects.

Why do some pools promise instant, guaranteed payments while others make you wait for actual blocks to be found?

As transaction fees surge toward 50% of block rewards (and beyond), the dominant payout structures used today may become mathematically impossible to sustain.

Pools exist to give miners peace of mind. The uncertainty of variance is the problem pools solve.

Most miners can’t handle the risk of paying for electricity and infrastructure without a guaranteed payment.

Would you rather buy a lottery ticket every day and hope to win, or join a pool of millions of lottery ticket buyers and split the rewards when someone wins?

This is pool mining👆

The way a pool rewards a miner can vary.

How a miner gets paid through a pool can impact profitability and centralization.

This letter breaks down the various payout structures and what they mean for the future of Bitcoin mining.

Pool Payout Methods

Pool payouts are not just "how miners get paid.”

They are risk allocation mechanisms.

99% of mining pools use a version of FPPS.

Full-Pay-Per-Share (FPPS): The pool pays miners a fixed fee for each valid share submitted, regardless of whether a block is found.

The pool estimates the expected value of the block subsidy and the transaction fees.

When calculating this estimate, many FPPS pools will exclude the 3 highest and 3 lowest fee blocks.

This means miners getting paid via FPPS don’t have exposure to the outliers.

This is like the deluxe insurance package, estimating both base salary AND anticipated tips.

Miners demand consistent payouts (FPPS), which shifts the risk from individual miners (hashers) to the pool, which must pay out regardless of how many blocks have been found.

This reminds me of this chart:

FPPS is a major contributor to why mining pools are centralized.

Pay-Per-Last-N-Shares (PPLNS): Miners only get paid when blocks are actually found, with rewards distributed based on their recent share contributions.

No insurance here. This is pure lottery economics where winnings are shared proportionally.

Note that FPPS (insurance pools) need to have deep pockets. In a run of bad luck, they still need to pay the miners.

Here's the key insight most people miss: these aren't just different payout methods. They represent different approaches to who bears the risk of mining's randomness.

Ocean is the main PPLNS pool, and they use a variant of PPLNS called TIDES (Transparent Index of Distinct Extended Shares)

This eliminates reserve requirements entirely because miner rewards are paid out directly from each block.

How It All Started

Bitcoin mining pools emerged in 2010 out of mathematical necessity.

Individual miners faced brutal economics: Once hashrate really started to take off in 2010, each miner faced smaller and smaller odds of winning a block.

Current hashrate conditions are a good example:

If you wanted to win 1 block per month (1/4320 odds), you would need roughly 250 PH/s.

This could cost millions of dollars for machines and hundreds of thousands of dollars per month to run the operation.

If you get a bad luck streak for several months, you go bankrupt.

This is why Slushpool launched in 2010.

The early solution was simple: risk-sharing using PPLNS structures.

Instead of each miner finding one block per year (and going bankrupt paying electricity bills in the meantime), the collective would find blocks weekly, splitting rewards proportionally.

Pool luck created some variance, but over time, everything averaged out to mathematical expectations.

But PPLNS still required miners to stomach significant payout volatility.

The Present: The FPPS Insurance Solution

Fast-forward to today's landscape, FPPS dominates Bitcoin mining pools.

Giants like Foundry (30%+ network hashrate), Antpool, ViaBTC, and F2Pool all offering guaranteed payout structures. Why the shift?

Capital intensity exploded. Modern mining operations represent hundreds of millions in deployed capital. These miners are in the business of recouping this deployed capital as fast as possible. If they’re borrowing funds (using leverage), monthly revenue swings can be existential.

Many public miners want one thing: to get paid.

They don’t want to deal with variance, accounting, compliance, mempool management, etc.

This is how FPPS became the industry standard.

But insurance costs money. Current pool fee structures reflect this reality at ~1% of miner revenue.

Here's the hidden cost most miners ignore:

FPPS miners forfeit any revenue related to transaction fee spikes.

Block fee rates have historically seen several spikes into the 75th percentile.

We have seen fees as a % of broad miner revenue clock as high as 75% (April 2024 halving):

When fees explode to a large % of miner revenue, pools pocket the excess while miners get historical averages.

The trade-off seemed reasonable when transaction fees were small and predictable. That's about to change dramatically.

The Crisis Brewing

Let's examine the numbers that will dismantle this system.

In May 2023, we witnessed a preview:

6.7 BTC transaction fees + 6.25 BTC subsidy.

This was the first time in history transaction fees > block subsidy due to high block space demand.

This wasn't an anomaly, but rather a glimpse of Bitcoin's inevitable future.

Here's the math that terrifies pool operators:

Current state (post-2024 halving):

• Block subsidy: 3.125 BTC

• Average transaction fees: 0.1-0.5 BTC per block (highly variable)

• Fee spikes: Can exceed 2-6 BTC during network congestion

Future projections paint a stark picture:

• 2028 halving: Block subsidy drops to 1.5625 BTC

• 2032 halving: Block subsidy falls to 0.78125 BTC

• Fee percentage: Will inevitably become 50%, 70%, even 90% of total rewards

The variance explosion becomes clear:

Transaction fees will represent a bigger percentage of the total payout to miners.

This will increase the variance/uncertainty of payouts , which will perpetually increase the insurance costs for FPPS pools.

This analysis reveals the capital requirements: pools need anywhere from $47 million (450 BTC) for 95% survival probability over one year, up to $94 million (900 BTC) for 99% survival over three years.

And that's with TODAY'S relatively stable fee environment.

What happens when fees become the dominant, wildly volatile component of block rewards?

Why FPPS Is Destined For Disruption

Pool operators face an impossible trilemma as fee variance explodes:

1. Raise fees dramatically to cover variance insurance (potentially 5-10%+ pool fees)

2. Maintain massive BTC reserves (potentially billions in capital requirements, or even worse, Bitmain becomes the Federal Reserve of Bitcoin mining pools)

3. Exit FPPS entirely and abandon the insurance model

Option 1 makes pools uncompetitive. Option 2 is somewhat of the current situation, but miners are waking up to this. Option 3 seems inevitable.

The feedback loop accelerates the collapse:

Higher FPPS fees make PPLNS pools more attractive → hashrate migrates → remaining FPPS pools need even larger reserves per unit of hashrate → fees rise further → more migration occurs.

We're already seeing early experiments in post-FPPS structures:

Ocean Pool's TIDES System: TIDES is a Bitcoin mining pool payout system that reduces payout variance as low as possible without the pool operator needing to hold and buffer the Bitcoin rewards as a custodian.

This non-custodial PPLNS variant eliminates reserve requirements entirely while maintaining low variance through an 8-block window system.

NiceHash's RTPPS Model: The Real-Time Pay-Per-Share (RTPPS) system, introduced by NiceHash in 2014, allows miners to earn in real time based on the spot price of hashrate. Unlike traditional pay-per-share models, RTPPS calculates the price of shares every minute, driven by buyer demand for hashrate.

This marketplace approach separates hashrate provision from block finding.

Concepts like this are key to making Bitcoin mining *more decentralized.*

Miners sell computational power to buyers who direct it toward specific tasks and applications.

During high-demand periods, this price can surpass traditional payout rates, enabling miners to earn a premium.

In a perfect world, each block reward is fairly distributed to each miner according to their proportion of work in a certain window, with no middleman.

I think Bitcoin can achieve a compartmentalized version of this without a software fork.

Macro Forces Accelerating Change

Several broader trends make this transition inevitable:

Energy Market Integration: More risk management tools will become available as more players get involved, i.e., energy companies. Sophisticated miners increasingly prefer transparent risk pricing over opaque pool insurance.

Mining Consolidation: Larger operations have sufficient scale to handle variance without pool insurance, making FPPS less attractive to the most influential participants.

Capital Market Evolution: Mining companies are developing direct hedging instruments, reducing dependence on pool-level variance smoothing.

Investment Implications

For Mining Investors, think about these critical concepts:

• Fee-to-subsidy ratio: When fees consistently exceed 25% of total block rewards, how will miners pivot their hashing?

• Pool reserve adequacy: Major pools disclosed BTC holdings relative to their hashrate requirements.

• Fee structure changes: Rising FPPS fees (above 1-2%) signal impending model breakdown.

• Payout migration trends: Growth in PPLNS adoption may indicate disruption.

Strategic positions to consider:

• Pools developing sustainable, non-custodial payout structures

• Companies building variance hedging products for the mining industry

• Bitcoin infrastructure plays that benefit from mining decentralization

As a client of Simple Mining, we allow investors to choose any Bitcoin mining pool.

We are partnered with both the above pools: Ocean and NiceHash

There are unique benefits to each, and we help match investors with the best solution.

The current FPPS-dominated landscape is a temporary historical artifact of Bitcoin's low-fee era.

Smart money is already positioning for the new pool payouts era:

The return to risk-sharing models, but equipped with sophisticated new tools for variance management, non-custodial implementations, and transparent risk allocation.

TLDR:

• FPPS dominates today because transaction fees were historically small/predictable

• Rising fee volatility makes variance insurance impossible at scale

• Pool operators face a choice: massive fee increases or model innovation.

• Next-generation structures mitigate custodial risks

• This transition improves Bitcoin's decentralization and fee market efficiency

In mining, predictability commands a premium, but uncertainty costs everything.

Have a good weekend✌️

It was a pleasure to meet with all the clients, companies, friends, and successful entrepreneurs.

Some highlights:

• Announced S21+ Hydro miner presale

• Hosted private event with Giga Energy

• Adam and I were on mining stage panels talking about hosted mining and mining pools (will send out full newsletter on this soon).

• We are announcing the winner of the S21 Bitcoin miner on Sunday June 1st

• Gave away 1,000,000 satoshis each day to the strongest punch

I didn’t have much time to go listen to speakers, but I did spend some time on one particular keynote:

21 Ways to Wealth.

This keynote presentation by Michael Saylor will be relevant for the next 1000 years.

He shares the 21 ways to wealth for the 8 billion people on earth. Here's a breakdown of each one:

1) Clarity: Bitcoin is the best capital. Every smart person, nation, and AI will want the best capital. It's worth half of everything.

2) Conviction: Understand that Bitcoin will outperform everything. It is the fastest horse in the race, and there is no second best.

3) Courage: You can't achieve wealth by doing what everyone else is doing. Bitcoin is the asymmetric wealth transfer. Less than 5% of the world holds Bitcoin, far less understand it.

4) Cooperation: When your entire family understands Bitcoin, you are much more powerful. This hints at the level of urgency you should have when faced with this level of scarcity. The next generation has time, and the power of Bitcoin is leveraged with time. Set your kids up for success.

5) Capability: Master AI to be wealthy. In 2025, everyone is a super genius if you are inquisitive

6) Composition: Construct containers to protect your wealth. Insurance, trust account, tax-sheltered account, etc.

7) Citizenship: Build a geographic citizenship portfolio. Live where sovereignty respects your freedom.

8) Civility: Respect the civil laws. Choose your battles. Understand social norms.

9) Corporation: A well-structured corporation is the most powerful wealth creation engine on earth. A company can project out 30 years and then draw the economic energy back to today and invest it now.

10) Focus: Just because you can do a thing doesn't mean you should. Don't confuse ambition with accomplishment.

11) Equity: Issue equity to accumulate more Bitcoin. Share your alpha with investors.

12) Credit: Leverage the credit-based fiat system to accelerate 100 times as much money through proper financing to invest in the world's greatest asset.

13) Compliance: Abide by the rules of the market to access special rights. This can allow you to go faster and further.

14) Capitalization: The velocity of capital compounds your wealth. He who has the most Bitcoin at the end of the game wins.

15) Communication: Nobody will give you money if they don't trust you. Speak with candor and act with transparency. You don't need a complicated strategy. You need a straightforward one.

16) Commitment: Don't get distracted by your own good ideas. Satoshi gave you an idea worth half of everything on earth.

17) Competence: The world wants perfection from you. The market will shift to whoever is laser like focused.

18) Adaptation: Over a long enough time frame, every counterparty will fail, including you. A wise person is prepared to abandon their baggage at several times along the journey of life. Don't be ashamed to adjust your path.

19) Evolution: Your goal is graceful evolution, not radical mutation.

20) Advocacy: Become an evangelist of economic freedom.

21) Generosity: When you are successful, Spread happiness. Share security. Deliver hope.

The presentation is full of timeless wisdom applicable to all investors.

Be on the lookout for an announcement this upcoming week on the Simple Mining Referral Program, you won’t want to miss it.

Had a debate about this question at the conference, curious to see the general consensus:

If you are near the Bitcoin public square, you may have caught wind of the recent Bitcoin Core debate.

The framing conflict:

Should Bitcoin nodes actively filter non-monetary transactions (filter monkey jpeg)—or must they remain neutral relayers of any valid transaction (accept monkey jpeg).

This seems to be more of a cultural issue and less of a technical one.

Bitcoin’s promise is built on being permissionless.

Anyone, anywhere, can transact without fear of censorship.

Let’s unpack the debate clearly, with zero fluff.

Context & Definitions:

1. What is Bitcoin Core?

1. Bitcoin Core is the most widely used full-node software (~95% of nodes run Core)

   

   The Bitcoin Core software defines the consensus rules (21 million cap by the halving, no double-spend, block validation, etc.).

What is a Bitcoin node?

A Bitcoin node is any computer or server running the Bitcoin software, enforcing the consensus rules.

With a node you can verify your own balance and the full blockchain history, rather than trusting Coinbase, Strike, etc.

You can also have “mempool control” and choose which unconfirmed transactions to relay (broadcast to other nodes to get added to chain) or reject.

Common misconception:

Core developers don’t set consensus rules; they merely implement and maintain the code.

Node runners are the ultimate authority—they can refuse to run any software not in line with the consensus.

This decentralized model is inherently messy: no single arbiter can “break up” factional fights.

2. Relay Policy & Transaction Standardness

When a Bitcoin transaction is sent, the node doesn't broadcast it instantly to everyone.

Instead, it sends it to peers who check if it follows certain rules.

Relay policy refers broadly to all rules nodes follow when interacting with other nodes on the Bitcoin network—this includes how nodes manage transactions before they're confirmed in blocks.

A key part of relay policy is transaction standardness, meaning whether transactions conform to a set of non-consensus rules that help nodes avoid unnecessary resource drain (like processing spam).

3. OP_RETURN: Bitcoin’s “Digital Sticky Note”

OP_RETURN is a special kind of Bitcoin transaction output that stores small chunks of data.

It's provably unspendable, meaning the Bitcoin sent there is burned—gone forever.

Currently, Bitcoin limits this data to about 80 bytes, discouraging excessive non-financial data storage.

OP_RETURN was introduced in Bitcoin version 0.9.0 as a compromise to allow people to include arbitrary data inside transactions.

Using the blockchain for general-purpose cloud data storage isn't ideal, but you can't stop people from doing it.

Therefore, the OP_RETURN script acts as a more reasonable alternative for data storage than previous methods.

Something I think is misunderstood, is that the OP_RETURN creates a provably-prunable output, to avoid storing arbitrary data such as images as forever-unspendable TX outputs.

This brings us to the core of the debate:

1. Peter Todd’s PR

   • Goal: remove the 80-byte cap, allowing unlimited arbitrary data in OP_RETURN.

Some think removing the 80-byte cap is bad.

Some think it will improve Bitcoin.

4. UTXO Set: Bitcoin’s Ledger Snapshot

Bitcoin tracks ownership via a list of unspent transaction outputs (UTXOs). Think of the UTXO set as Bitcoin’s running ledger snapshot—every transaction you make references UTXOs you own. Keeping the UTXO set small is crucial because every full node must keep it forever, making it expensive if too many useless entries pile up—this is what “bloating the UTXO set” means.

The Two Sides of the Debate:

🟢 Free Market Side: “If you pay fees, it's valid—not spam.”

Bitcoin is a money on a digital ledger and needs a database to function.

Bitcoin uses the blockchain as a database and blockspace as a means to limit the growth of that database.

Blockspace is a free market for anyone to participate in.

So what happens when someone purchases that blockspace to speculate with their money?

Can we dictate how people use their money? (Bitcoin does not rely on central planning after all)

• Main argument:

  • Bitcoin is built on permissionless principles. Transactions paying valid fees, no matter their use case (even controversial data or inscriptions), should never be censored.

• Core points:

  • Economic freedom: Let fees naturally price out low-value transactions.

  • Practical reality: Attempts to censor through node rules rarely work—miners will always accept profitable transactions through alternate relays.

  • Example: During the 2021 OFAC controversy, Marathon briefly filtered transactions from sanctioned addresses but stopped after community backlash. Most pools ignored such filters, mining those transactions anyway because they were in their mempools and offered fees.

🔴 Filtering Side: “Not all data belongs on-chain—some transactions are harmful spam.”

• Blockspace is scarce and should be reserved for monetary transactions.

• Existing OP_RETURN already gives spammers a “sandbox”—removing the limit is a slippery slope to full-blown data storage (“my node is not your Google Drive”)

• Node-runner sovereignty: Bitcoin Core’s PR would erase our ability to choose (config-option removal).

• Main argument:

  • Storing arbitrary data (NFTs, JPEGs, inscriptions) on-chain increases node costs, bloats storage, and harms decentralization.

• Core points:

  • Resource protection: Nodes must remain affordable to run; unnecessary data burdens decentralization.

  • Active defense: Nodes independently filtering transactions are legitimate and preserve decentralization.

  • Miners aren't guardians: Miners seek profits, not network health. Node-runner filtering provides a decentralized check.

• Notable advocates: Bitcoin Knots

Interesting Analogies:

• E‑mail spam folder: Nobody calls it “censorship” to filter junk mail.

• Fence Analogy: Local law says “fences are useless, someone climbed one once,” and forbids you to build a fence. That is what Core is doing to node mempools.

• Open‑borders / cultural dilution analogy: Allowing mass influx of users who don’t value sovereignty dilutes the original culture, eventually flipping priorities.

• Second‑Amendment analogy: Millions of armed citizens change incentives even if each gun can’t beat a tank. Likewise, millions of filtering nodes matter even if a miner can mine spam.

Historical Perspective (and Why It Matters):

Bitcoin has a long history of using relay policy to combat spam:

• Early Bitcoin (2010-2013): Satoshi himself introduced standardness rules to prevent network flooding.

• OP_RETURN Wars (2014): Limits set on data storage as a compromise.

• Blocksize Debates (2015-2017): Community defended small blocks to keep nodes decentralized.

• Recent controversy (2023-2025): Post-Taproot, large data inscriptions surged, reigniting debates over filtering and OP_RETURN limits.

This isn’t the first controversy over spam.

Why Lift OP_RETURN Limits Now?

Bitcoin Core developer Peter Todd proposed removing OP_RETURN limits because existing restrictions inadvertently push users towards even more damaging methods—like stuffing data into Taproot witness inputs, permanently enlarging the UTXO set with junk entries.

• Today’s reality: The OP_RETURN limit no longer effectively prevents large data storage (SegWit data embedding is already ~5000x larger).

• Example: Citrea’s Clementine bridge stored extra data using two unspendable Taproot outputs due to OP_RETURN limit—each permanently bloating the UTXO set.

Paradoxically, standardness rules intended to protect Bitcoin’s decentralization are encouraging methods that harm it more severely.

Hard Fork vs. Soft Fork (Quick Reminder):

• Soft Fork: A backward-compatible upgrade; new rules that tighten transaction validation (like adding standardness rules). Older nodes still see new transactions as valid.

• Hard Fork: A non-compatible upgrade; loosens or fundamentally changes rules, meaning all nodes must upgrade, or the blockchain splits (Bitcoin Cash is a famous example).

Bitcoin Core and Bitcoin Knots (the two sides of this debate) are not two prongs of a fork. They both agree to the same consensus rules. The difference is how the node software is managed.

Standardness changes like removing OP_RETURN limits are typically neither hard nor soft forks, but relay-policy adjustments. Still, understanding forks helps clarify the stakes of these rule changes.

Macro Tie-in: Bitcoin’s Governance and Cultural Tension

Beneath the technical arguments lies a deeper philosophical dilemma:

• Cultural sovereignty vs. Practical resource constraints

• Censorship resistance vs. Effective spam management

Bitcoin Core faces growing pains, as Bitcoin morphs from niche cypherpunk money into a global financial asset managed by diverse interests—from ETF managers to activists in Nigeria or Argentina. This raises hard questions:

• Who is Bitcoin Core really serving?

• How do we balance innovation with legacy integrity?

• Who defines what counts as spam—and what doesn't?

Bitcoin’s current "volunteer firefighter" model (small, underfunded dev teams voluntarily maintaining critical infrastructure) is under massive stress. The OP_RETURN debate is just one symptom of deeper governance challenges.

What Bitcoin Mining Investors Should Do Now

What should you, as an investor, actually do about this?

• Stay Educated: Recognize debates like this contribute to Bitcoin’s fundamental identity (not kill Bitcoin).

• Become an Intermediary: Run a node (Bitcoin Core or Bitcoin Knots) and understand the policies it enforces. Run a miner and create your own block templates.

• Follow Developments: Monitor closely how Bitcoin Core resolves these issues. Major policy shifts can significantly impact usability, fees, and network health.

• Think Critically: Resist oversimplified narratives of “Bitcoin Core compromised” or “Bitcoin’s dying.” These are nuanced debates—Bitcoin’s resilience depends on informed discourse.

TLDR & Final Thoughts:

• Relay policy (the rules nodes use to broadcast transactions) includes standardness rules to deter spam.

• OP_RETURN limits historically managed blockchain bloat—but are now ineffective and counterproductive.

• Removing OP_RETURN limits could reduce harmful alternatives, yet concerns remain about censorship resistance and resource protection.

• Debates reflect deep cultural divides: permissionlessness vs. resource stewardship; innovation vs. ossification.

Bitcoin’s greatest strength—peer-to-peer hard money you can send without needing permission from a central 3rd party —is also its most challenging feature.

But debates like these are healthy; they prove Bitcoin is monetary policy dictated by the people, not the Federal Reserve.

After all:

In Bitcoin, controversy isn’t a sign of failure—it’s proof that decentralization works.

In the last 15 days:

Bitcoin is up 25%

Gold is up 7%

S&P500 is down 0.5%

In the last 30 days:

Bitcoin is up 9%

Gold is up 8%

S&P500 is down 5%

Is Bitcoin the new risk-free asset amidst political turmoil?

Ever feel like you’re always buying Bitcoin at full-price?

You know what I’m talking about:

You check your phone and see the price starting to climb.

You smash “Buy.”

Minutes later, the chart climbs again, and you feel disappointed – you could have got more BTC for less $.

You feel like you bought overpriced Bitcoin (even though there is no such thing).

If you keep doing this each rally, it is really going to cost you.

Bitcoin doubles, and your buying power cuts in half.
That’s a one-way ticket to less Bitcoin and nonstop FOMO.

But what if you could lock in a wholesale rate—no matter what the price is—by turning cheap electricity into discounted Bitcoin?

Let’s see how:

Every shopper loves a good deal, and investors are no different.

The catch: spot-buying Bitcoin rarely feels discounted. Even if you set up a DCA (Dollar-Cost Average), your purchasing power is at the whim of price swings.

Price shoots up, you pay more, you stack less.

Mining effectively ignores the price action.

When you plug in an ASIC, you’re no longer buying BTC at the sticker price; you’re producing it at your electricity rate. You get hard money at wholesale prices.

Below are four discount-psychology moves that help you see (and seize) the hidden markdowns inside Bitcoin mining.

1. Anchor on Cost—Not Quote Price

The concept:
Retail investors fixate on Bitcoin’s USD pricetag. Miners anchor on input cost—¢/kWh. This cognitive shift turns every block reward into “clearance merchandise.”

When BTC doubles, the DCA buyer’s cost per coin doubles too.

For the same to happen with mining, your electricity rate needs to double, or the hashrate needs to double.

Example:

From October 2024 to December 2024, the Bitcoin price increased by 59%

In the same period, hashrate increased 14%.

This means a DCA returned 59% less BTC while mining returned 14% less BTC (due to increased competition for the same block reward).

Miners' purchasing power is determined by hashrate. Spot buyer's purchasing power is determined by USD/BTC exchange rate.

Open our Mining Revenue Calculator → plug in your electricity rate → note the “DAILY COST” and “DAILY REVENUE.” If the daily cost is less than the daily revenue, you’re acquiring Bitcoin at a discount.

2. Exploit Loss Aversion With Hashprice Lows

The concept:
Humans hate missing out more than they like winning. Hashprice (earnings per TH/s) bottoms after halvings. This is when the fewest investors are interested in Bitcoin mining.

Scooping machines in capitulation windows feels uncertain, but it sets you up for 200-300 % hashprice rebounds

Example:
October 2020 hashprice hit $0.07/TH. The S19 Pro was selling for roughly $3,000. By October 2021 hashprice rebounded to $0.40/TH; the same machine was valued at $11,000.

Bookmark Hashrate Index. Pay attention to where hashprice is relative to the most recent halving. If you secure your mining position when hashprice is low, you can set yourself up to earn Bitcoin at a discount when the market rebounds.

3. Rack Space Scarcity

Scarcity encourages urgency. This is part of why Bitcoin is appealing to investors. A level of scarcity that is inelastic to demand.

Hosting slots are finite; when price rapidly increases, so does demand for rackspace and cheap electricity.

Locking in contracts before demand spikes guarantees you discounted capacity when everyone else is in a bidding war to plug in.

This will only be exaggerated with tariffs.

4. Bitcoin Mining as Discounted BTC

With Bitcoin mining, you're not purchasing Bitcoin at the market rate; you're buying electricity, which is converted into Bitcoin.

This can dramatically reduce your BTC acquisition cost, especially when Bitcoin prices rise sharply.

Example:

• A new miner costs $7/day to run and mines $15/day in BTC.

• A daily dollar-cost-average (DCA) of $7 buys $7 worth of BTC daily.

If Bitcoin’s price doubles overnight:

• The miner still costs $7/day but mines $30 worth of BTC daily.

• A $7 DCA now only buys half as much BTC.

In this scenario, mining returns 4x more BTC than the DCA method.

Calculate your current daily BTC acquisition cost. Consider how switching to mining could reduce your effective BTC cost.

Mining turns price-takers into price-makers. You can chase exchange coupons (discounted trading fees) or run the machine that prints permanent markdowns.

Remember,

The deepest discount you’ll ever get on Bitcoin is the one you mine yourself.

Important post from this week:

Current tariff situation as of April 22, 2025:

Baseline 125% on imports from China

12.6% on imports from other countries

Unless new amendments are made before July 9, 2025, this will be the situation:

Thailand: 12.6% -> 38.6%

Indonesia, Taiwan: 12.6% -> 34.6%

Malaysia: 12.6% -> 26.6%

Many of our ASICs are sourced from Southeast Asia (Thailand, Indonesia, Taiwan, Malaysia).

This equates to almost a 40% increase in prices if nothing changes by July 9th.

Bitcoin recently passed $90k, a key resistance level.

What do you think happens next?

Bitcoin is getting more expensive, and so are ASICs.

Your market entry point has a significant impact on your profitability, and now might be one of the most obvious entry points.

We know ASIC prices are not going down unless Bitcoin goes to $50k,

and the market is clearly hinting Bitcoin is a safe haven asset amidst the political turmoil.

Zoom out, think like a savvy investor, and you'll be in a favorable position when 2025 Bitcoin starts to act like 2020 Bitcoin.

Here is the info to get started:

Have a good weekend✌️

P.S.

This publication is now The Bitcoin Mining Investor:

The main topics covered will be Bitcoin mining education and profitability analysis – with the goal of making you a better investor.

The tariff mania continues.

ASICs are subject to UP TO 245% tariff from China.

It is unclear how much more expensive ASIC imports will be as a result. The situation is evolving daily.

We currently have S21, S21+, S21 Pro, and S21 XP units in stock that can be live the same day as payment.

No high tariffs involved. Under current market conditions:

You may have heard about the trending ETF, MSTY:

What is it?

How are they paying out 8% “dividends” per month?

Is it a ponzi?

How does it compare to Bitcoin mining?

This letter has the answers👇

How MSTY Works: Options

MSTY generates this return by trading options on Strategy (MSTR), a Bitcoin-holding company. Instead of buying MSTR shares directly, MSTY creates a “synthetic” position using options:

• Synthetic Long Position: MSTY buys call options and sells put options at the same strike price, replicating MSTR’s price action with less capital required.

• Covered Calls: MSTY sells additional call options monthly, generating regular income but capping the upside potential.

In simple terms – MSTY generates income from the volatility of MSTR stock.

Why options instead of direct stock ownership?

Options require less initial up-front investment. It’s like the off-brand version of MSTR that’s cheaper to make.

MSTY also uses anything leftover after buying options contracts for other investments, like treasury bills.

Granted, the allocation to T-bills is only responsible for 0.5% of the yield.

This means the fund technically only pays a 0.5% “dividend” in the eyes of the SEC. The other 80% is viewed as ordinary income.

The monthly income is based on volatility and market conditions.

If volatility dips, premiums shrink, reducing potential income.

Bitcoin Mining Comparison

Mining is similar in the sense that you make an initial capital outlay and receive payouts based on that investment.

Beyond that, the strategies have distinct differences.

Mining generates BTC rewards daily to your mining pool. MSTY generates income monthly in dollar terms to your brokerage account.

Mining profitability depends on electricity costs, hardware efficiency, and Bitcoin’s price relative to hashrate.

MSTY profitability depends on the actions of the fund managers, volatility of MSTR, and your tax situation.

Comparing MSTY and Bitcoin mining from April 2024 with a $5,000 investment (the cost of an S21 Pro miner at the time), here's how they performed:

Link to data

Without accounting for costs, mining significantly outperformed MSTY, especially in capital preservation.

Performance in Bull Markets: MSTY vs Mining

MSTY gains are capped due to selling covered calls (if MSTR rises past a certain price, the fund loses exposure).

This means MSTY benefits from upward price movement but won’t capture the explosive rallies. You can see this when comparing the fund with MSTR and spot BTC:

With MSTR, investors trade some upside potential for monthly income.

To contrast with mining, you retain exposure to Bitcoin the whole time (assuming you don’t sell any of your mined rewards).

Mining capitalizes on the correlation between spot BTC price and hashrate.

Since mined earnings are denominated in BTC rather than dollar amounts, profits grow when Bitcoin's price grows.

For instance, miners during bull cycles have historically seen profitability spikes of 200% or more year-over-year.

We saw this in 2021:

Mining > MSTY in bull markets.

Neutral & Bear Markets

Bitcoin doesn’t always go up.

Extreme mining profitability doesn't last forever.

Eventually, more miners come online, increasing mining difficulty and reducing the revenue that can be captured from each hash.

In bear markets, both MSTY and mining face challenges.

MSTY’s synthetic exposure closely tracks MSTR, meaning declines in MicroStrategy’s stock impact MSTY significantly.

Income from selling calls provides a small buffer but won't fully cover substantial market downturns.

Neutral markets provide a different dynamic.

MSTY performs best in sideways or moderately volatile markets, consistently collecting the option premiums.

Mining can have an edge in neutral conditions if hashrate growth is small.

MSTY can offer a more “predictable” outcome in neutral and bear markets, but we know Bitcoin doesn’t stay neutral for long.

NAV Erosion

Net Asset Value (NAV) erosion is not to be overlooked.

NAV reflects an ETF's underlying assets divided by outstanding shares.

MSTY distributes income monthly, typically lowering NAV by the distribution amount.

If MSTY doesn't earn enough through its option strategy to cover distributions, it returns investor capital directly—termed "Return of Capital" (ROC).

Over time, consistent ROC payments diminish NAV, effectively cannibalizing investors' original investment.

NAV is clearly compressing:

This means compressed income payouts over time.

This creates a negative cycle: lower NAV, lower income generation, smaller option premiums, and smaller future payouts.

The value of ASIC miners can also erode over time.

For example, you could buy a miner for 0.1 BTC and sell it for 0.5 BTC later.

But the opposite can also be true. It depends on when you purchase your miner.

Advantages of Mining

Mining Bitcoin offers several add-on benefits:

• Tax Benefits: Mining equipment qualifies for depreciation → reducing taxable income. For instance, a miner earning $100k annually who purchases a $5,000 ASIC can deduct this fully over time, lowering taxable income to $95k. You can’t do this with MSTY shares.

• Financing Options: Financing ASIC purchases reduces initial cash outlay, potentially improving ROI (depends on your interest expense).

• Privacy (Non-KYC): Depending on your pool, mining generates BTC directly from Bitcoin blocks, free from transaction history and Know-Your-Customer (KYC) surveillance. Non-KYC Bitcoin often trades at a premium.

MSTY doesn't provide these advantages. Its returns are straightforward income streams without tax, financing, or privacy benefits. Investors prioritizing these factors will find mining a superior solution to their income needs.

Conclusion: MSTY or Mining?

I always say it depends on your personal goals, risk tolerance, and market outlook.

It could be a combination of both.

I am biased, but it seems like mining is the clear winner from a tax perspective, and most investors need to pay taxes.

If you can hold onto your mined rewards for at least a year, they will be subject to long-term capital gain tax (15% currently).

MSTY payouts are taxed as ordinary income, so if you are in a high tax bracket, you are getting a sizeable haircut.

• MSTY: Offers *consistent* USD income but caps upside potential. It's ideal for investors seeking regular cash flow through a brokerage account.

• Mining: Offers *consistent* BTC income, and yields exponential returns in bull markets. Offers tax, privacy, and financing benefits. Profitability heavily depends on entry, hardware efficiency, and electricity costs.

Choose wisely based on your priorities—ownership, profitability, liquidity, and privacy.

Every $ has an opportunity cost of what it could be in BTC —choose a strategy that builds wealth in hard money terms.

Enjoy your weekend✌️

This about sums up the week:

Let’s get straight into what you came here for 👇

Mining vs MSTR vs Buying BTC

To understand which approach is the best, you need to have a benchmark (a ruler to measure with).

We are trying to get more in BTC terms.

“What actions can I take now that will return me the most Bitcoin 10 years from now?”

Also, I will say none of these approaches is “best.”

Each has unique benefits.

Some combination might yield the highest ROI.

Let's break down how each stacks up across five main categories:

1. Bitcoin Ownership and Custody

With regular direct purchases of Bitcoin, you get varying levels of sovereignty.

For example, there are only ~ 2 million BTC on exchanges:

The amount on exchanges is going down over time.

What happens when this supply on exchanges runs out?

More people are seeking to protect their wealth in cold storage.

What happens when Bitcoin is the most demanded asset in the world?

Mining Bitcoin also has varying levels of sovereignty.

For example, you could get a mini home miner (bitaxe), or you could partner with a Bitcoin miner host.

Mining Bitcoin means you get a portion of newly minted BTC from each block (the BTC may also be KYC-free).

Even if you use hosting services like Simple Mining, your mined Bitcoin goes straight from a pool into your wallet, offering a seamless level of ownership.

NOTE: The sovereignty of your mining operation depends on which pool you are using.

Best case scenario:

If you receive 1 BTC mined through your own hardware or a hosting solution, that BTC could be a virgin coin sent straight from the coinbase.

MicroStrategy (now Strategy) is a stock. You never actually have custody of any BTC when you buy a share of MSTR.

You are buying ownership in a company that has custody of BTC.

Each MSTR share is backed by ~ 0.0017 BTC.

The company is currently valued at ~ 2x its Net Asset Value (NAV).

In other words, they are worth 2x the value of their Bitcoin holdings.

This introduces trust in a third-party entity and comes with potential regulatory and management risks.

“Not your keys, not your coins.”

I like to think of it as a trading play in BTC terms.

For example:

You are hoping you can buy 1 MSTR for 1 BTC at time 0 and sell 1 MSTR for 2 BTC at time n.

You rely entirely on the success of Strategy as a company (which, granted, is highly correlated to the success of Bitcoin).

In terms of actual BTC ownership, mining and spot buying have a clear advantage.

2. Profitability and Bitcoin Accumulation

Profitability, or rather, wealth accumulation in BTC terms, is the name of the game for most.

Buying BTC directly is simple—your stack grows directly with your purchases. Profitability depends entirely on your entry price and returns less BTC over time.

Buying MSTR is straightforward—your investment's value tracks Bitcoin's price at a multiple (because the company leverages debt and financial wizardry).

In August of 2020 (when the company started buying BTC), one share of MSTR was worth 0.001182 BTC. At the time of writing, one share of MSTR is worth 0.00377 BTC (219% increase in BTC terms)

Does this mean you should just buy MSTR stock?

MicroStrategy uses strategies such as options, equity conversions, convertible bonds, and other financial maneuvers to increase Bitcoin per share.

MicroStrategy is able to access cheap debt and use it as leverage to get more Bitcoin.

They have more than any other publicly traded company. People get their stock because they believe this will be an extremely valuable advantage in the future.

It has *more* counterparty risk and less sovereignty than mining and spot buying, so you decide.

NOTE: MicroStrategy could have THE SAME counterparty risk as spot buying if you’re holding your BTC on an exchange and NOT taking self-custody.

The Bitcoin mining strategy introduces many profitability variables to think through.

Such as:

• Price: How much does it cost to purchase this ASIC? What is the opportunity cost in terms of Bitcoin?

• Hashpower: How much BTC can I expect the machine to mine? Higher hashing power = higher revenue.

• Efficiency: Is the machine energy efficient? How many watts does it consume per hash? Lower W/Th = more efficient.

• Life Span: What's this machine's expected lifespan? How long will it remain competitive before newer machines make it obsolete?

• Electricity Cost: How much will this machine cost in electricity each month? Will I be able to pay the monthly hosting out of pocket without having to sell any of my mining rewards?

When mining, you purchase a machine (which we price in Bitcoin terms) and aim to produce more Bitcoin than you initially spent.

I wrote an entire report explaining how mining can appreciate in BTC terms.

In the report, mining returned 13% more BTC, and that’s not even factoring in depreciation.

Mining is also somewhat of a trade because, in the perfect mining scenario, you purchase equipment when hashprice is relatively low, mine a bunch of BTC, and then resell your equipment when hashprice is relatively high.

You get the same amount of BTC back on your machine; anything you mined is extra.

This could be a 10% or 300% increase in BTC terms. It could also be negative with poor timing.

Mining has several unique advantages:

• Depreciation of mining hardware

• Tax-deductible expenses

• A dollar cost average at an electricity rate

• Financing options

• Non-KYC value

Mining also allows you to benefit from transaction fees. When you are buying stock or BTC on an exchange, you are paying a fee to whoever is executing the transaction for you.

In Bitcoin’s case, those transactions pay a fee to the machines executing the order (miners).

The TLDR is it depends on your situation. If you are mining with Simple Mining, it is possible to stack more BTC than the MSTR and spot buy strategies.

3. Cost and Cash Flow Considerations

Investing in MSTR is relatively simple—buy shares and hold with no additional costs.

However, if MSTR trades at a premium to its Bitcoin holdings (NAV), you often pay more for the underlying Bitcoin.

Mining involves ongoing operational expenses.

For instance, an S21 miner might cost around $200 monthly to run with a host. These expenses can often be offset by tax benefits.

The initial purchase of MSTR or spot BTC does not currently have any tax advantage.

All three of these strategies are very price and market dependent. You will get a higher BTC return if you have a good entry point.

This is why people use a dollar cost average strategy to smooth out the cost.

Mining effectively does this at a discount to spot buying because you are paying in electricity terms.

4. Liquidity and Flexibility

Liquidity refers to how accessible your money is. MSTR is the least liquid in BTC terms. You can sell shares fairly quickly, but then you need to convert back into BTC and send to your wallet.

Mining is a combination of liquidity. You can easily sell ASIC hardware on our miner marketplace and receive your payout in BTC. The mined rewards distributed from the mining pool are also liquid.

5. Privacy and KYC Considerations

Investing in MSTR means you're fully transparent. Your ownership and identity are linked through brokerage accounts, reporting requirements, and regulations.

Mining offers more privacy (the advantage of accumulating KYC-free Bitcoin).

Depending on your pool, the BTC rewards go directly to your wallet without mandatory reporting to centralized entities (freshly minted virgin BTC).

Example: Non-KYC Bitcoin typically trades at a premium on peer-to-peer exchanges.

If privacy and reduced third-party exposure matter to you, mining holds significant advantages over buying BTC on an exchange and publicly traded stock.

In summary:

• Direct ownership: Mining and spot BTC purchases are winners.

• Potential Profitability: Mining and MSTR can outperform with a good entry.

• Cost Management: Mining is the only solution offering tax advantages.

• Liquidity: Mining and spot BTC provide the most flexible liquidity.

• Privacy: Mining and spot buying (peer-to-peer) have the best privacy.

Ultimately, your choice depends on your individual priorities—ownership control, profitability, liquidity, costs, or privacy.

I’m also hosting a space today at 5PM ET to break down this topic in further detail.

P.S. We have S21 Pros available starting at $5650. You can book a call if you have any questions.

Have a great weekend✌️

For those readers active on X/Bitcoin Twitter, I recently hosted a 2-hour signal-packed discussion on tariffs, ASIC manufacturing, AI, and mining centralization.

Breaks down many top of mind trends for Bitcoin miners:

You can listen to the recording here: Proof of Work and Bitcoin Mining Space

Bitcoin mining just took a massive step in pool development.

For years, mining pools have been consolidating.

Today, the top three pools “control” over 70% of Bitcoin's total hashrate.

The main issue here is not necessarily the percentages but rather the centralization of block template creation.

If you're a freedom maximalist and believe in everything Bitcoin stands for, this should cause you to raise an eyebrow.

Stratum V2 is set to change some things:

• It lets miners propose their own block templates.

• It secures miners from hashrate hijacking with built-in encryption.

• It introduces transparency into mining pool fee structures, benefiting miners directly.

This week, the DMND mining pool became the first-ever Stratum V2 pool to launch.

If you're mining Bitcoin, investing in mining, or a passionate open source nerd, you need to know about this:

Resource List:

• Bitcoin Magazine on DMND and Stratum V2 Bitcoin Magazine (6 min read) Details on why Stratum V2 matters and how DMND pool secured VC backing.

• Galaxy Research on Stratum V2 Galaxy Insights (10 min read) Deep dive into the technical improvements and the decentralization impact of Stratum V2.

• Stratum V2 Explained Braiins (8 min read) A clear breakdown of how Stratum V2 improves security, decentralization, and efficiency.

• Hashrate Robbery Braiins (5 min read) A quick primer on what hashrate hijacking is and why miners should care about securing against it.

3 Things To Understand About Stratum V2 And Why It’s a Game Changer (Even if You’re Not a Mining Nerd)

If you care about decentralization and miner profitability, you're going to need a clear grasp of Stratum V2.

Here's what you need to know:

1. Miners Gain Block Template Control (This is huge)

Right now, mining pools dictate block templates, centralizing decision-making. Stratum V2 flips this upside down, allowing miners to propose their own block templates. This is similar to what we see with Ocean’s DATUM.

This effectively reduces the risk of censorship or manipulation.

What does this mean for you?

More security, more optionality, and less chance for powerful pools to dictate terms. It shifts power back into the hands of individuals.

2. Built-In Security Against Hashrate Hijacking

Hashrate hijacking is real—and it's costing miners money. Attackers can intercept your mining shares and claim your rewards.

Stratum V2 addresses this directly with end-to-end encryption between miners and pools. Your hashrate stays protected, ensuring every sat you mine ends up in your wallet.

3. Transparent Fees = Bigger Profits for Miners

Pools today have murky fee structures. You often have little idea if you're truly getting your fair share of transaction fees. DMND is solving this by implementing SLICE, a way to transparently share fee data with miners.

With Bitcoin’s block reward increasingly shifting toward transaction fees, clear and fair fee structures mean more predictable profits. The SLICE payout system ensures miners capture every bit of the contribution to the subsidy AND fees.

Instead of having all shares be part of one huge lookback window(PPLNS), SLICE divides the lookback window into smaller slices of time.

In each slice, all of the shares submitted will be compared and scored to the highest revenue-generating share.

That's it.

Here's what you learned today:

• Stratum V2 decentralizes mining by empowering miners to propose block templates.

• It secures miners against costly hashrate hijacking attacks.

• Transparent fee structures increase profitability and fairness for miners.

You can check out the DMND waitlist here. You can get 0% pool fees for the first two months, allowing you to test these benefits firsthand.

We allow our clients can point their hashrate wherever they choose.

Let me know what you thought of today's email👇

PS...If you're enjoying these insights, please consider forwarding this to a friend who might benefit. It helps grow our community and Bitcoin mining education.

And here are 3 ways Simple Mining can help you:

1. We host Bitcoin miners so you can earn daily Bitcoin rewards.

2. Get a white-glove mining service that maximizes uptime and profitability.

3. Protect your profitability with our in-house expert repairs and maintenance.

Talk soon ✌️

Hashprice is the lowest since November 2024:

With the hashprice dip, ASIC prices are also on sale.

Check out this post from October of last year:

“Hashprice is the single best indicator of when a good time to get a miner is.”

We recently adjusted pricing on the S21 XP, you can learn more here.

Reply to this email if you think I snubbed one.

THE TOP 10 BITCOIN ADS OF ALL TIME

1. The “Buy Bitcoin” sign in Congress, 2017

2. FTX SuperBowl Ad, 2022

3. BurnTheFed - Broken Money, 2025

4. Jerome Powell: "The U.S. is on an unsustainable fiscal path." 2024

5. Unchained - Sleep soundly on a Bitcoin standard, 2024

6. Coinbase - Break The Cycle, 2023

7. Get a girlfriend with Bitcoin, 2023

8. The Bitcoin Matrix, 2025

9. Update The System, 2023

10. Bitcoin pizza ad referring to when Laszlo Hanyecz bought two pizzas for 10,000 BTC

P.S. We also started a Simple Mining Bracket (we might announce a giveaway for the winner). Password is 21MBTC

Have a great weekend✌️