Another Bitcoin Miner Adopts MicroStrategy’s Playbook of Buying BTC in Open Market

As a researcher involved with Cathedra Bitcoin (CBIT), I’d like to express our strategic shift in business approach. Originally a mining operation, we’re now focusing on developing data centers. The revenue generated from these data centers will be utilized to procure bitcoins rather than mining them directly. This change is driven by the insights gathered over the last three years, which have shown us that Bitcoin mining may not be a consistent method for increasing shareholders’ Bitcoin holdings per share. Our primary objective remains the accumulation of Bitcoins for our valued shareholders. In other words, we believe this new approach will serve our shareholders better in their pursuit of Bitcoin growth.

During the 2021 cryptocurrency surge, people found it advantageous to mine bitcoin rather than buy it from the open market due to its high profit potential and low barrier to entry for setting up a mining business. However, this trend shifted significantly after the crypto winter, the approval of U.S.-traded exchange-traded funds (ETFs), and the halving – an event that reduced rewards by half, making mining even more challenging and competitive.

Currently, the miners find themselves battling to keep their heads above water and amass Bitcoin at a reduced cost, whereas firms like MicroStrategy (MSTR) are being applauded by investors as they purchase Bitcoin from the open market.

In simpler terms, out of the top 10 publicly traded Bitcoin mining companies based on market value, nine of them have less Bitcoin per share compared to three years ago. Cathedra, being one of these miners, has seen a decrease in this area as well. Conversely, other listed firms like MicroStrategy (MSTR) have decided to increase the amount of Bitcoin they hold per share and have been positively acknowledged by stock markets for their decision.

The organization announced its shift towards creating and managing data centers, as these provide more stable income streams. Subsequently, the earnings from this venture will be utilized for purchasing bitcoin in the open market. Interestingly, it has recently combined with Kungsleden, a firm specializing in developing and operating high-density compute infrastructure of an alternative nature, to accomplish this strategic goal.

Furthermore, Cathedra plans to explore alternative funding methods like loans (debt), stock sales (equity), and derivative contracts tied to bitcoin (bitcoin-linked derivatives) in order to acquire additional bitcoins. At present, Cathedra possesses 43 bitcoins within its assets.

JPMorgan reported that the hashprice, a measure of daily miner profits, dropped by 2% this month and is currently over 50% lower compared to before the halving event. Simultaneously, Jefferies noted that Bitcoin mining was significantly less profitable in August than in July, with September looking challenging due to an increase in hashrate.

Cathedra stated that by shifting its focus from bitcoin mining, which has unpredictable income, towards data center development and operation – a sector offering steady cash flow and good returns on investment – the recent merger with Kungsleden should lead to substantial growth in Bitcoin value per share for Cathedra over the long term.