Marathon Digital has diversified its mining operations by adding $16 million worth of Kaspa (KAS) to its portfolio, while the United States government transferred 3,940 Bitcoin to a Coinbase Prime wallet following a significant seizure. Meanwhile, U.S.-based spot Bitcoin exchange-traded funds (ETFs) experienced a reversal in their net outflows, seeing $31 million in inflows on June 25.
Marathon Digital Diversifies with $16 Million Kaspa Mining, Focus Remains on Bitcoin
Marathon Digital, a prominent player in the Bitcoin mining industry, announced that it has mined $16 million worth of Kaspa (KAS) since September. This diversification effort aims to address Bitcoin's scalability issues and capitalize on the higher profit margins associated with Kaspa mining.
On June 26, Marathon Digital unveiled its diversification strategy, highlighting the firm's commitment to exploring alternative mining opportunities. "By mining Kaspa, we are able to create a stream of revenue that is diversified from Bitcoin," stated Adam Swick, Marathon’s Chief Growth Officer. Swick emphasized the potential for higher margins with Kaspa mining machines, which can reach up to 95% in some cases.
Marathon Digital's decision to mine Kaspa is not a full-scale shift from Bitcoin but rather a strategic addition to its mining portfolio. The firm has mined 93 million KAS tokens since deploying its first batch of Kaspa miners in September 2023. During this period, KAS tokens surged by 420%, compared to Bitcoin's 135% increase.
To support its Kaspa mining operations, Marathon Digital has acquired approximately 60 petahashes of KS3, KS5, and KS5 Pro ASICs. Currently, half of this equipment is operational, with the remainder set to be installed by the third quarter.
Despite the significant investment in Kaspa mining, Marathon Digital remains firmly committed to Bitcoin as its primary focus. Robert Samuels, Marathon’s Vice President of Investor Relations, clarified this stance in a June 26 post on social media. "Kaspa will represent just 1% of our energy capacity once fully deployed," Samuels noted. "To say we are ‘pivoting’ is wrong and irresponsible."
Since September, Marathon has mined 9,761 Bitcoins, valued at $594.9 million. This figure starkly contrasts with the revenue generated from Kaspa mining, indicating that Bitcoin remains the cornerstone of Marathon's operations.
Following Marathon's announcement, KAS tokens rallied by 2.4%, raising their price to $0.172 and the total value of Marathon's KAS holdings to $16 million. According to CoinGecko, Kaspa ranks as the fifth largest proof-of-work cryptocurrency, boasting a market cap of $4.1 billion. With 24 billion KAS tokens in circulation and a capped supply of 28.7 billion, Kaspa continues to gain traction in the cryptocurrency market.
Kaspa stands out due to its Direct Acyclic Graph-derived architecture, known as "BlockDAG," which allows blocks to be added to the network simultaneously rather than linearly. This results in a rapid block rate of approximately one block per second, significantly faster than Bitcoin's ten-minute block time. While Kaspa offers improved scalability and speed, it remains far from rivaling Bitcoin's dominance. Bitcoin boasts between 700,000 and 1 million unique active addresses daily, while Kaspa's network sees around 20,000.
Marathon Digital's foray into Kaspa mining represents a calculated diversification strategy to augment its revenue streams and capitalize on high-margin opportunities. However, the firm remains steadfast in its commitment to Bitcoin, ensuring that its primary focus remains unchanged. As the cryptocurrency landscape continues to evolve, Marathon's strategic diversification may serve as a model for other mining companies seeking to balance innovation with core operational priorities.
U.S. Government Transfers 3,940 Bitcoin to Coinbase Prime Wallet Amid Market Anxiety
On June 26, the United States government transferred 3,940 Bitcoin to a Coinbase Prime wallet, as revealed by on-chain data from Arkham Intelligence. This significant transaction, executed at 17:00:41 UTC, has drawn considerable attention due to its origins and potential market implications.
The Bitcoin involved in this transfer was seized from convicted drug trafficker Banmeet Singh. Singh's arrest in 2019 by British authorities in London marked the beginning of a lengthy legal process. In 2023, Singh was extradited to the United States, where he faced charges for running a narcotics smuggling network from 2012 to 2017. His operations spanned several states, including Maryland, New York, North Dakota, Washington state, Ohio, North Carolina, and Florida.
As part of the judgment against Singh, he was forced to surrender over 8,100 Bitcoin to U.S. authorities, valued at approximately $150 million at the time. This seizure was characterized by the United States Drug Enforcement Agency (DEA) as the largest cryptocurrency confiscation ever performed by the agency. Singh was subsequently sentenced to five years in prison in April 2024. However, after receiving credit for time served, he was released and reportedly planned to return to India, his native country.
The transfer of 3,940 Bitcoin to Coinbase Prime has intensified fears among market participants about potential government sell-offs affecting Bitcoin's price. These concerns have been exacerbated by recent reports of the German government unloading its Bitcoin holdings, valued at roughly $2.76 billion. The latest of these transactions, also occurring on June 26, involved the transfer of 345 Bitcoin to a wallet labeled "Flow Traders."
The United States government is known to hold substantial quantities of Bitcoin acquired through seizures and asset forfeitures. Arkham Intelligence data indicates that the U.S. government currently owns approximately 214,000 Bitcoin, valued at $13 billion, making it the largest state holder of the decentralized currency in the Arkham Intel database. This massive holding represents a significant potential influence on the Bitcoin market.
Investor fears of a Bitcoin price decline are also being stoked by the selling pressure from the Mt. Gox bankruptcy estate. The former exchange is in the process of unloading 140,000 Bitcoin to reimburse victims of the infamous 2014 Mt. Gox collapse. However, despite these looming sell-offs, exchange balances are at six-year lows, which has provided a stabilizing counterbalance to the selling pressures.
Reversal of Outflows in U.S.-Based Bitcoin ETFs Marks a Turning Point
After experiencing a week of significant net outflows, United States-based spot Bitcoin exchange-traded funds (ETFs) witnessed a positive turnaround on June 25, with net inflows amounting to $31 million. This shift follows seven consecutive trading days marked by substantial outflows, totaling $1.1 billion.
Data from SoSo Value indicates a noteworthy reversal in the recent trend of outflows from spot Bitcoin ETFs. Leading the charge was the Fidelity Wise Origin Bitcoin Fund (FBTC), which reported $49 million in net inflows on June 25. This was followed by the Bitwise Bitcoin ETF (BITB) with $15 million in inflows and the VanEck Bitcoin Trust ETF (HODL) with $4 million in net inflows.
Conversely, some funds continued to see net outflows. The Grayscale Bitcoin Trust (GBTC) experienced net outflows of $30.3 million, while the ARK 21Shares Bitcoin ETF reported $6 million in net outflows. Despite these losses, the overall sentiment in the market appeared to be improving, as evidenced by the net inflows into several prominent ETFs.
While the reversal in outflows is encouraging, it was not uniform across all major funds. BlackRock’s iShares Bitcoin Trust ETF (IBIT), the largest fund by assets under management, saw no inflows on June 25. Similarly, ETFs from Invesco Galaxy, Valkyrie, and Franklin Templeton also did not record any inflows on the same day.
Despite these mixed performances, the 11 spot Bitcoin funds that debuted in January have collectively seen net inflows of $14.42 billion as of June 25. This substantial inflow signals the growing interest and confidence in Bitcoin ETFs among investors, even amid periods of volatility.
The recent outflows from U.S.-based spot Bitcoin ETFs were the highest since April, when total net outflows exceeded $1.2 billion between April 24 and early May.
As the market for Bitcoin ETFs shows signs of recovery, attention is also turning towards spot Ether ETFs. Following a soft approval by the U.S. Securities and Exchange Commission (SEC) in May, prospective issuers are finalizing their registrations in anticipation of launching these new investment vehicles.
Investment manager VanEck has made significant progress by filing a Form 8-A with the SEC for its spot Ether ETF on June 25, bringing it closer to launching. According to Bloomberg ETF analyst Eric Balchunas, spot Ether ETFs could potentially begin trading in the U.S. by July 2.
The price of Bitcoin showed a slight decrease over the past 24 hours to trade at $61,040 at press time, according to CoinGecko data.
The recent inflows into spot Bitcoin ETFs, despite the continued outflows from some funds, suggest a complex but ultimately resilient market. While investors navigate the evolving landscape of cryptocurrency ETFs, the upcoming launch of spot Ether ETFs could further diversify investment opportunities and stimulate additional market activity.
