Bitcoin Shop is getting into the bitcoin mining business, forging a partnership with North Carolina-based bitcoin miner Hashmaster.
Bitcoin Shop has reportedly procured mining equipment to be operated at Hashmaster’s facilities. The intention is to expand the operation and thereby lower operating costs.
Various bitcoin-based businesses, notably exchanges, have recently expanded into the mining business. For many, the new business integrates directly into existing operations, such as through the offering of traded mining contracts.
In the case of Bitcoin Shop, it appears that the new mining activities have no connection with the existing e-commerce business. Theoretically, it can leverage economies of scale with its new, large stock of equipment with the marketing of its e-commerce platform, although this seems unlikely.
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More plausible: the company is seeking to expand and diversify its revenue streams in light of its apparent struggles to revolutionize the world of e-commerce with bitcoin. Earlier this month, it was announced that the company’s management is waiving its salaries for 6 months.
Bitcoin Shop CEO Charles Allen explained the move as follows:
“It is increasingly hard for small mining operators to stay relevant, however, we believe there is great potential for larger-scale data center operators to mine digital currency and generate strong returns. Hashmaster offers both a state-of-the-art facility with low cost power and the experience necessary to acquire and manage mining equipment on our behalf. As we broaden our footprint in the digital currency ecosystem, we feel Hashmaster offers the right opportunity for us to enter this area of digital currency. Not only do we expect bitcoin mining to be highly profitable, it should also provide bitcoins for other efforts currently under way.”
Hashmaster has also agreed to an exclusivity clause with Bitcoin Shop ensuring that they will not mine with any other publicly traded company.
Bitcoin Shop shares, traded under BTCS on the OTC markets, remain in line with yesterday’s trading range of $0.085-0.10.