Marathon Digital Mines Millions In KAS As Kaspa Surges

Marathon Digital, a major Bitcoin mining company boasting a $5.48 billion market cap, announced it is mining KAS, the native asset of the surging Kaspa network.

On June 26, Marathon Digital revealed that it has mined 93 million KAS tokens (now worth $15 million) since September 2023. Marathon said it first began exploring mining KAS as a means to diversify its revenue beyond Bitcoin mining, with KAS offering profit margins of up to 95%.

“By mining Kaspa, we are able to create a stream of revenue that is diversified from Bitcoin,” said Adam Swick, Marathon’s chief growth officer. “Because of our existing infrastructure, [and] our unique relationships with hardware manufacturers… Marathon was uniquely positioned to mine Kaspa and to capitalize on the higher margins.”

Marathon said it purchased Application Specific Integrated Chip (ASIC) miners from Bitmain capable of driving 60 petahashes per second (PH/s) worth of KAS mining power. However, only half of its miners are currently operational, with the company planning to bring the remaining ASICs online during Q3 2024.

Robert Samuels, Marathon’s vice president of investor relations, emphasized that only 1% of the firm’s energy capacity will be utilized for KAS mining. “To say we are ‘pivoting’ is wrong and irresponsible,” Samuels said.

Marathon mined 9,761 Bitcoin worth $594.9 million since September 2023, meaning its KAS operations brought in the equivalent of 2.7% of its BTC mining revenues.

Kaspa roars to contention

The price of KAS rallied 9% in 24 hours, according to The Defiant’s crypto price feeds, raising the value of Marathon’s KAS holdings to $16 million.

Kaspa has quietly risen through the digital asset rankings over the past 12 months with a 600% increase in the price of KAS propelling the asset to rank as the 27th-largest cryptocurrency by market cap with $4.17 billion. The supply of KAS is capped at 28.7 billion, with 83.6% of the supply already in circulation.

Kaspa currently ranks as the fifth largest Proof of Work cryptocurrency behind Bitcoin, Dogecoin, Bitcoin Cash, and Litecoin. As such, Kaspa is beating out many longstanding mainstays of the PoW ecosystem including Ethereum Classic, Monero, and Zcash.

When looking at hashrate, Kaspa currently boasts a network hashrate of 345 PH/s or 0.341 exahashes per second (EH/s), ranking fifth behind Bitcoin with 564.5 EH/s, Bitcoin Cash with 3.49 EH/s, Bitcoin SV with 0.717 EH/s, and Nervos with 0.352 EH/s.

Parallel blocks

Kaspa was founded in 2021 by Yonatan Sompolinsky, with the project seeking to implement the GHOSTDAG protocol co-conceived by Sompolinsky and Aviv Zohar in 2016.

GHOSTDAG sought to overcome the issue of orphaned blocks created by Bitcoin. Orphaned blocks occur when multiple miners create blocks at the same time, resulting in the network selecting a single block to include in the chain’s history and discarding the competing blocks.

Kaspa argues that orphaned blocks create a security vulnerability for Bitcoin, with a bad actor needing to harness 49.9% of global hashrate to attack the network, rather than 51% as is popularly believed.

To address this, GHOSTDAG allows competing blocks to be included within the network’s history, utilizing a Directed Acyclic Graph (DAG) or “BlockDAG” structure to include the blocks that Bitcoin would otherwise discard. This mechanism allows Kaspa to create up to 18 blocks in parallel.

“The core idea is very simple: instead of having any block point to a single parent block, allow it to point to many parents, thus giving the blocks in the network the structure of a DAG rather than a chain,” Kaspa said. “We then traverse the chain and include all transactions which do not contradict previous transactions.”

Kaspa also claims to offer the largest maximum throughput among PoW networks, buoyed by block times of just one second.

However, Kaspa has recently processed just one transaction per second (TPS) on average, and posted an all-time high of 2 TPS in December.

For comparison, Bitcoin’s throughput has oscillated between 4 TPS and 9 TPS this month, posting an all-time high of 10.3 TPS on Dec. 31, 2023.

Kasplex promises to bring smart contract functionality to Kaspa

Still, Kaspa’s throughput claims may soon be put to the test, with Kasplex, a project building infrastructure on Kaspa, readying to introduce Ethereum-inspired tokens to the network.

Kasplex launched a closed beta for its upcoming KRC-20 standard for fungible tokens on May 24, with the open beta launch set to go live on June 30.

The project also plans to introduce the KRC-721 standard for non-fungible tokens in the future.

Kaspa hosts roughly 22,400 active addresses daily.