The role of equipment quality in cryptocurrency mining operations


  • CHRISTOPHER TU Department of Finance, School of Business, George Mason University, Fairfax, VA
  • Jiasun Li Department of Finance, School of Business, George Mason University, Fairfax, VA



In the rapidly evolving field of cryptocurrency mining, a process heavily reliant on heavy energy consumption from mining rigs, profitability is influenced by a myriad of factors. One such factor is the quality and sophistication of mining equipment. While advanced equipment can enhance mining efficiency, this advantage must be weighed against the substantial capital investments required for equipment upgrades as well as the costs of power consumption. Past research has generally focused on the impact of different sources of energy on activity levels of miners. This study aims to explore the trade-off between the use of advanced mining equipment and cost-saving measures. Drawing on a detailed analysis of annual SEC filings from 11 publicly traded Bitcoin mining companies with mining operations in North America, there exists a potential positive relationship between procurement of state-of-the-art mining equipment and a company’s financial performance. However, as technology constantly improves, maintaining up-to-date, high-quality mining equipment is a significant challenge for companies, requiring substantial capital investments. Global shortages of key components can cause mining equipment to become scarce, allowing for the possibility of companies to obtain a comparative advantage by receiving access to such equipment. The findings reveal that strategic equipment management and allocation of power resources for the equipment play a critical role in maximizing profitability in the cryptocurrency mining industry.  






School of Business: Department of Finance