Why the bitcoin mining industry is likely to consolidate

Gone are the days when small Bitcoin miners didn’t have to worry about competing with data center giants.

As miners assess the competitive landscape, some are discovering a desire to merge — whether it’s intended or not. Most notably, Bitfarms recently adopted a “poison pill” to reject an unsolicited takeover offer from mining rival Riot Platforms.

Whether this consolidation continues depends on the options available to mining beginners.

Pow.re, a company led by co-founder and CEO Mike Cohen, aims to reshape the winner-take-all dynamic. In a recent discussion with Roundtable host Rob Nelson, Cohen discussed the dynamics of the industry, its evolution and future prospects. The conversation highlighted the transition from small-scale mining operations to large, publicly traded companies, and the unique opportunities that bitcoin mining presents.

Nelson began by considering the significant changes in the mining industry, noting that it has moved from hobbyist setups to large-scale operations. Mike Cohen recalled his own journey from starting in the basement to witnessing the growth of the industry firsthand. He pointed out the inevitable consolidation in the industry, likening it to other industries where large corporations often dominate.

Cohen, however, emphasized that bitcoin mining is different because of its international nature. He explained that the global distribution of mining operations allows smaller, independent miners to coexist with larger companies. He argued that this diversity is vital to the health and resilience of the industry. Cohen emphasized that bitcoin’s permissionless system creates a unique competitive environment by allowing anyone with the capital and knowledge to participate.

Nelson questioned whether the future of mining would see a sharp divide between small independents and large companies. Cohen responded by highlighting the flexibility and efficiency that small-scale miners can achieve, especially in regions where they can provide essential energy infrastructure. He stressed that profitability in mining is determined not just by scale, but by strategic operations and resource management.

To make mining more accessible, Pow.re is working to introduce derivative contracts and offer hashrate to buyers. This innovation aims to lower the technical and financial barriers for those looking to experience mining without managing extensive infrastructure.