In an effort to capitalize on higher profit margins, Marathon Digital, a major player in Bitcoin mining, has ventured into mining Kaspa (KAS), a cryptocurrency designed to address Bitcoin’s scalability issues. Since September, Marathon has mined $16 million worth of Kaspa, diversifying its revenue streams while maintaining its primary focus on Bitcoin.

Marathon Digital announced on June 26 that mining Kaspa has allowed the firm to benefit from the higher margins achievable with Kaspa mining machines, which can reach up to 95%. Adam Swick, Marathon’s chief growth officer, highlighted that mining Kaspa creates a diversified revenue stream apart from Bitcoin. “Marathon was uniquely positioned to mine Kaspa and to capitalize on the higher margins that exist for those who can deploy Kaspa ASICs today,” Swick explained.

Since deploying its first batch of Kaspa miners in September 2023, Marathon has mined 93 million KAS tokens. During this period, KAS tokens have surged by 420%, significantly outpacing Bitcoin's 135% increase. To mine these tokens, Marathon has purchased approximately 60 petahashes of KS3, KS5, and KS5 Pro ASICs, with half of this capacity currently operational and the rest expected to be installed in the third quarter.

Despite this foray into Kaspa mining, Marathon’s Vice President of Investor Relations, Robert Samuels, clarified that the company is not shifting its primary focus away from Bitcoin. "Kaspa will represent just 1% of our energy capacity once fully deployed," Samuels stated, emphasizing that claims of Marathon pivoting away from Bitcoin are incorrect.

Marathon’s Kaspa mining operations, while noteworthy, remain a small part of its overall revenue. Since September, Marathon has mined 9,761 Bitcoin, valued at approximately $594.9 million, indicating that Kaspa mining constitutes a minor fraction of the company’s total earnings. Nonetheless, the announcement caused a 2.4% rally in KAS tokens, bringing their price to $0.172 and the total value of Marathon’s KAS holdings to $16 million.

Kaspa stands out as the fifth-largest proof-of-work cryptocurrency, with a market cap of $4.1 billion and 24 billion KAS tokens in circulation, capped at 28.7 billion. Unlike Bitcoin, Kaspa utilizes a layer-1 protocol and a Direct Acyclic Graph-derived architecture known as “BlockDAG,” which allows for simultaneous block additions to the network. This results in a fast block rate of about one block per second, compared to Bitcoin’s approximately 10-minute block time.

Despite these advancements, Kaspa remains far from rivaling Bitcoin in terms of user engagement. Bitcoin sees between 700,000 and 1 million unique active addresses interacting with its network daily, while Kaspa's daily active addresses hover around 20,000.

Marathon Digital's strategic diversification into Kaspa mining reflects the firm's adaptability and pursuit of higher margins while reaffirming its commitment to Bitcoin as its primary focus.