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On The Brink with Castle Island

Nov 29, 2021

Galaxy Digital Mining Associate Brandon Bailey and Research Associate Karim Helmy join the show to cover a new accounting methodology for Bitcoin miners. In this episode: 

  • Galaxy's new miner margins accounting methodology
  • Brandon and Karim origin stories in mining
  • How the randomness-based miner fingerprinting works
  • How Karim thinks about miner depreciation schedules
  • Why the Bitcoin e-waste paper understates the expected lifetime of Bitcoin ASICs
  • S9s are still a quarter of the Bitcoin network
  • Why Karim and Brandon created the new accounting framework
  • The differences between marginal, direct, and total cost of production for BTC miners
  • Does the sell side capably cover Bitcoin miners?
  • What you would expect to see for marginal and total cost of production for established Bitcoin miners
  • Why miners focus on marginal cost rather than total in their storytelling
  • Major bottlenecks preventing the addition of new hardware
  • Why hashrate may not converge to price in the near term
  • Why the chip shortage advantages incumbents in Bitcoin mining
  • Why Kazakhstan is scaling back their Bitcoin mining
  • Why mining manufacturers do not get priority access to the best foundry capacity
  • Why established miners will be able to mine Bitcoin at favorable rates for the near and medium term
  • Why of the accounting identities Galaxy would prioritize when evaluating public mining companies
  • How Galaxy arrived at a 3 year depreciation period for the average mining unit
  • What advice Brandon and Karim would give you public market analysts evaluating mining companies

See the full write up and sample model here

Sponsor notes: 

  • This episode is brought to you by Withum, a top 25 accounting firm with a cutting-edge Digital Currency and Blockchain Technology practice. To learn more, visit
  • OurCrowd analyzes companies across the global private market, selecting those with the greatest growth potential, then brings them to you. Get started at