Leading Bitcoin mining firm, Stronghold Digital, announced a two-year hosting agreement with Cantaloupe Digital, a subsidiary of Canaan, the Bitcoin application-specific integrated circuit (ASIC) manufacturer. Stronghold plans to activate 2,000 Avalon A1346 miners and 2,000 A1246 models under the new partnership, resulting in a total hashrate capacity of 400 petahash per second (PH/s) by the end of June.
This move will enhance Stronghold’s position as a mining powerhouse, allowing the company to fully utilize the capacity of its Panther Creek data center. Furthermore, the partnership will enable Stronghold to expand its hashrate capacity up to 3.6 exahash per second (EH/s) by June, keeping pace with other mining companies that are also increasing their ASIC rig fleets in 2023.
However, critics argue that this partnership and hosting agreement may contribute to further centralization of the Bitcoin mining industry, resulting in fewer players in the market with larger mining capacities. Moreover, with the increasing demand for power-intensive mining operations, concerns over the environmental impact of such activities continue to persist.
In response, proponents of the agreement believe that it will drive innovation in the industry, leading to improvements in energy efficiency and cost reductions for mining equipment. As evidence, Blocksbridge Consulting’s research published on April 29, 2023, indicated that the cost of producing Avalon miners has decreased, with costs dropping from $50 per terahash per second (TH/s) to $12 per TH/s for each generation of Avalon ASICs, from the A7 to A13 series.
The partnership appears to be a win-win situation for both Stronghold and Canaan. Stronghold will receive 50% of the Bitcoin (BTC) mined by the Canaan Miners, while Canaan will make payments to Stronghold equal to 55% of the net cost of power at the Panther Creek plant.
In summary, despite concerns over centralization and environmental impact, the latest move by Stronghold Digital is set to improve the company’s mining capabilities and increase profitability, while contributing to the overall advancements in the Bitcoin mining industry. However, the long-term ramifications of these hosting agreements and the consolidation of mining power among a few firms remain to be fully understood. To maintain the decentralized essence of Bitcoin, continuous evaluation and potential regulatory steps might be required in the future.