Company Strengthens Strategy of Developing Proprietary Infrastructure
Compass Mining, a leading provider of Bitcoin mining hosting services, announced on Tuesday the commencement of operations at the first phase of its self-owned mining facility in Iowa. The initial 8-megawatt (MW) phase of the planned 30 MW project is now online, with construction on the remaining capacity scheduled to begin in the fourth quarter of 2025. This strategic move reflects the growing trend in the mining industry toward vertical integration and strengthening control over operational infrastructure in a highly competitive market.
Expansion of Proprietary Capacity in a Key US Region
The new facility, located on a 5-acre site in Iowa, significantly expands Compass Mining’s portfolio of self-operated infrastructure. According to the announcement shared with Bitcoin.com News, this facility will allow the company’s clients to deploy their equipment directly to the Iowa location.
“Expanding our self-owned infrastructure is a crucial step in strengthening Compass Mining’s position as a leader in Bitcoin mining hosting,” said Paul Gosker, CEO of Compass Mining. “Owning and operating our own sites gives customers greater operational control while still allowing them to choose from our network of reliable third-party facilities to best meet their individual needs and preferences.”
The Iowa mining center follows the company’s recent launch of a hydro-cooled mining site in North Dakota, demonstrating a consistent strategy of geographic diversification. In 2024, Compass added nearly 50 MW of power capacity across six U.S. states, including Indiana, Ohio, and Texas.
“The choice of Iowa for a new major data center has strategic significance,” explains Maria Volkova, an analyst specializing in energy infrastructure for cryptocurrency mining. “This state offers an attractive combination of relatively low electricity costs, a favorable regulatory climate, and good cooling opportunities thanks to the moderate climate for most of the year.”
Hybrid Business Model and Competitive Advantages
Founded in 2020, Compass Mining quickly became a notable player in the Bitcoin mining hosting market. The company initially developed primarily as a marketplace connecting mining equipment owners with hosting providers but has actively invested in creating its own infrastructure in recent years.
According to company representatives, the new expansions align with the strategy of growing self-operated infrastructure while maintaining partnerships with third-party hosting providers. This hybrid model allows Compass to offer clients more options for equipment placement and ensure higher service quality.
“We’re observing a clear trend in the Bitcoin mining industry toward increased vertical integration,” notes Alexander Brown, partner at investment firm Digital Asset Capital. “Companies are striving to control more links in the value chain, from securing access to electricity to managing data centers and equipment maintenance. This allows for the optimization of operational expenses and increased business margin in the context of reduced block rewards after the halving.”
Although the company did not disclose projected timelines for the full completion of the Iowa facility or associated costs, industry experts estimate investments in the construction of a 30 MW mining center in the range of $30 to $45 million, depending on the cooling technologies used and the level of automation.
Industry Context: Consolidation and Efficiency Improvement
The launch of Compass Mining’s new facility comes during a period of significant changes in the Bitcoin mining market. Following the halving in April 2024, which reduced the block reward from 6.25 to 3.125 BTC, miners faced the need to increase operational efficiency to maintain profitability.
“In the current conditions, companies capable of ensuring the most efficient ratio of electricity costs to computing power are surviving,” explains Denis Smirnov, CTO of mining consultancy firm HashRate Solutions. “Direct control over infrastructure allows for the optimization of numerous parameters: from selecting the most efficient cooling systems to fine-tuning ASIC miner operation modes depending on current electricity costs and Bitcoin exchange rates.”
The mining market is also experiencing a period of consolidation, where larger and financially stable players like Compass Mining are expanding their presence, while less efficient operators are forced to reduce capacity or exit the market entirely.
“We expect that by the end of 2025, up to 20% of existing mining companies may cease operations or be absorbed by larger players,” predicts Elena Kravchenko, senior cryptocurrency market analyst at investment company Digital Horizons. “Under these conditions, Compass’s strategy of expanding its own capacity while maintaining a flexible partnership model appears quite justified.”
Outlook and Future Plans
Although Compass Mining has not disclosed exact timelines for the full completion of the Iowa facility, the fact that the company plans to begin work on the remaining capacity in the fourth quarter of 2025 indicates a long-term commitment to development in this region.
The expansion in Iowa is part of a broader growth strategy. In 2024, the company significantly increased its presence in the United States, adding almost 50 MW of capacity across six states. Particularly noteworthy is the launch of a hydro-cooled facility in North Dakota, which demonstrates the company’s movement toward more energy-efficient technologies.
“The transition to water cooling is an important technological trend in the industry,” explains Mikhail Voronin, an engineer specializing in cooling systems for high-performance computing. “Liquid cooling systems can reduce energy consumption for cooling by 25-40% compared to traditional air cooling, which is critically important for increasing the efficiency of mining operations.”
Compass Mining is also strengthening its position in competition with large players such as Core Scientific and Marathon Digital Holdings, which are also actively investing in expanding their own capacities. However, Compass’s unique position as a hybrid service provider, combining its own infrastructure with an extensive network of partner facilities, gives it certain advantages in serving various market segments – from large institutional clients to individual miners.
“Compass occupies an interesting niche, serving the market segment between large institutional miners and individual enthusiasts,” notes James Wilson, founder of investment firm Crypto Capital Ventures. “Their expansion of proprietary infrastructure strengthens this positioning and allows them to offer more competitive services to the growing segment of medium-sized miners.”
For Compass Mining clients, the new facility in Iowa will provide additional opportunities for equipment placement with potentially more attractive operating conditions and an increased level of control over operations. This is particularly important in the context of growing competition for access to quality hosting after the closure of several providers in 2023-2024.
As the Bitcoin mining industry evolves and moves toward greater maturity, Compass Mining’s strategic expansion demonstrates adaptation to changing market conditions and preparation for a long-term presence in this sector, despite the cyclical nature of the cryptocurrency market.