Proto Labs ROCE Suggests Difficult Times Ahead

Proto Labs' return on capital employed (ROCE) has declined from 11% to 3.3% over the last five years, while the base of capital employed has remained relatively stable. This suggests a mature business with limited growth potential, making it unlikely to become a multi-bagger. The low ROCE underperforms the Machinery industry average of 12%.

Block, co-founded by Jack Dorsey, has introduced a significant innovation to the Bitcoin mining industry with the launch of Proto Rig and Proto Fleet. These new products, unveiled at Core Scientific’s mining facility in Georgia, aim to challenge the dominance of Chinese manufacturers such as Bitmain and MicroBT, which have long controlled over 90% of the global market [1].

Proto Rig is a modular, upgradable mining hardware designed to last up to a decade, offering tool-free repairs within 90 seconds and greater power efficiency per rack foot. This shift from disposable hardware to long-term infrastructure represents a significant departure from the current industry standard [1]. Thomas Templeton, Block’s hardware lead, emphasized that the rig aims to treat mining equipment as long-term investments, allowing operators to manage capital expenditures over a longer period.

Alongside Proto Rig, Block introduced Proto Fleet, a free and open-source fleet management software platform. This software streamlines operations through diagnostics, monitoring, and maintenance, offering accessibility to both large and small miners. By open-sourcing the software, Block aims to modernize the mining industry, break away from closed systems, and foster a more collaborative innovation ecosystem [1].

The strategic timing of this launch aligns closely with Bitcoin hitting a record high of $124,457.12 on August 14, 2025, and just hours after crypto exchange Bullish’s NYSE debut. This surge in the crypto market has created an environment ripe for innovation in mining infrastructure [1].

The efficiency improvements of Proto Rig and the open-source nature of Proto Fleet directly address the challenges posed by the Bitcoin halving cycle. Lower repair costs, minimal downtime, and the ability to upgrade components without replacing entire units could help miners preserve profit margins in a tightening reward environment. For some operators, especially in energy-competitive markets, these changes may mean the difference between profitability and closure [1].

The launch of Proto Rig and Proto Fleet also has broader implications for the U.S. mining industry. If the technology gains traction, it could reduce reliance on overseas manufacturers and support the growth of domestic operations. Additionally, the open-source software may lower entry barriers for smaller miners, promoting network decentralization and encouraging innovation in efficiency and energy use [1].

Block’s strategic timing aligns with a broader surge in the crypto market. The same day as the announcement, Bullish, a Peter Thiel-backed exchange, raised $1.1 billion in its NYSE debut. With Bitcoin hitting a new all-time high and Bullish’s successful IPO, the environment is ripe for innovation in mining infrastructure [1].

Thomas Templeton concluded the launch by reiterating the company’s ethos: “What’s good for Bitcoin is good for all of us.” For U.S. miners, this represents a pivotal shift toward open, collaborative innovation, offering a path to higher uptime, lower costs, and greater control over operations [1].

References:
[1] Bitcoin Mining Gets A Major Power Boost. Here’s What Comes Next. [https://www.forbes.com/sites/beccabratcher/2025/08/16/bitcoin-mining-gets-a-major-power-boost-heres-what-comes-next/](https://www.forbes.com/sites/beccabratcher/2025/08/16/bitcoin-mining-gets-a-major-power-boost-heres-what-comes-next/)