Bitcoin miners play a critical role in the bitcoin network by validating transactions and securing the blockchain. They invest substantial capital in specialized hardware, computational power, and operational costs, all in pursuit of block rewards — newly minted bitcoins and transaction fees. However, the mining industry is characterized by:

• • Extreme Competition: The global market for hashrate is intensely competitive, with miners continuously upgrading equipment to improve efficiency and searching for access to lower cost power.
  • Difficulty Adjustments: The bitcoin network adjusts the mining difficulty approximately every two weeks, making it harder (or easier) to mine new bitcoins over time. The long-term trend of mining difficulty has been up and to the right, since bitcoin’s inception.
  • Halving Events: Approximately every four years, the bitcoin block reward is halved, reducing miners’ revenue and increasing their reliance on transaction fees.
  • Operational Costs: High energy consumption leads to significant operational expenses, often forcing miners to sell the majority of their mined bitcoins to cover costs.

These factors create a challenging environment for traditional miners to accumulate bitcoin sustainably. Miners are engaged in a 24/7/365 global competition for incremental hashrate — if miners are unable to grow the hashrate of their individual operation commensurate with the aggregate growth rate of total network hashrate, they are effectively being diluted. The predominant form of competitive advantage utilized by miners today is access to low cost energy, which is not necessarily sustainable.