The Ultimate Resource For The Bitcoin Miner And The Mining Industry (#GotBitcoin?)
How To Build A Crypto Mining Rig In 2020 To Earn Bitcoin And Ether. The Ultimate Resource For The Bitcoin Miner And The Mining Industry (#GotBitcoin?)
Mining with home rigs is back, so here’s what those interested need to know to put together their own rig at home.
It is not surprising that countries experiencing difficult political and economic situations have witnessed a boom in the purchase of GPU cards in recent months. In the region of Abkhazia, where all crypto activities have been illegal since 2018, citizens spent more than $500,000 on mining equipment over a period of six months.
Another factor that has worked to further popularize mining is strong crypto prices. Bitcoin (BTC) has risen by almost a third, while Ether (ETH), the most popular currency for mining, has added $150 to its price and the decentralized frenzy has meant that gas fees have reached unprecedented levels.
So, here’s how to design a cryptocurrency rig — and an exploration of whether it needs to be done at all, given all the associated risks.
Mining Rig Components
A cryptocurrency mining rig consists of a computer that has many graphics cards but no monitor. Computer cases are filled with GPU cards, a power-generating unit, a motherboard and a cooling system. If a monitor is connected, it can become a regular computer where a user can open a browser or play their favorite video game.
The Rig Is Connected To The Internet, And Thus, The Blockchain Network. The Network Operates By Itself To Conduct Monetary Transactions Using The Power Of The Graphics Cards. To Be More Specific, A Mining Rig Consists Of:
* An ordinary motherboard, which has the capability of linking to a number of connectors for GPU cards.
* A hard disk drive, or HDD, with 100 to 250 gigabytes of memory to house the cryptocurrency wallet, with an Ether wallet usually taking up 25 GB and a BTC wallet requiring 50 GB or more.
* Several GPU cards, which are the most important components in a rig because they are the base that defines the cryptocurrency that a user will mine, along with their future profit and its timeline.
* A power-generating unit. A rig with four GPUs often requires more than one power unit. Usually, miners have a few 750-watt units connected together.
* A power adapter for GPU cards. Video cards are connected to the motherboard using special extension cards called “risers.” There are many different types and models of risers, but the PCI-E 1x version 006 is the most popular.
* A power switch.
* A cooling system, and it’s preferable to have several coolers to provide additional airflow.
Another important detail is the frame for the rig. It is better to make a frame out of wood or aluminum. The size of the mining rig will be slightly larger than its frame due to protruding parts, adapters and a cooling system.
For example, a seven-GPU rig will be approximately 21 inches wide (53 centimeters), 12 inches deep (30 centimeters) and 12 inches high (30 centimeters).
After purchasing all the components of the rig, it’s time to design it, which is a rather easy task for a person who has experience with computer hardware. Additionally, there are plenty of guides on YouTube.
When a rig is ready, all that needs to be done is to install some software — i.e., to choose a program for mining the currency of preference. Another way is to find a mining pool, which is a popular way to mine, as it’s becoming harder to do so individually due to the rising complexity of crypto mining.
There are also some tools available such as TeamViewer, for remote control, and WatchDog, which automatically restarts the system if the program freezes.
Top GPU Cards
As a rule, one rig should include four to seven video cards — it’s a number that will not go beyond the framework of a stable operation, although there are exceptions.
Miners can connect 10 to 15 GPU cards to one motherboard, but seven is the optimal number because Microsoft’s Windows 10 operating system can detect only this number of cards. But there is a solution: specialized mining software based on the Linux kernel. In that case, the key is to choose the right motherboard, such as an ASRock Pro BTC+ series or similar.
Determining which GPU cards are best for mining is not so straightforward, as the answer depends only on the amount of money that the miner has. In general, it makes little sense to buy the most expensive, powerful GPUs for the price of two to three slightly weaker ones, as there is a greater chance the cheaper ones will bring more benefits due to their low power consumption and initial cost.
The highest income in mining is currently achieved with Nvidia GeForce RTX 2080 Ti and AMD Radeon VII cards, but it is more profitable to build a mining farm with AMD Radeon RX 580 and Nvidia GeForce GTX 1660 Super cards, as they will pay off much faster.
It should also be kept in mind that AMD RX series GPU cards can be flashed by changing the working time of the RAM, downvolting the core and overclocking. Programs such as MSI Afterburner and Sapphire TriXX can assist in making these manipulations, which will help GPU cards achieve maximum performance during the mining process.
Electricity In Question
In over 10 years, the mining industry has turned from something incomprehensible and rather cheap to a professional, high-tech venture that implies high barriers of entry, not only for the equipment but also for its maintenance.
After Purchasing Mining Equipment, Paying The Cost Of Electricity During Its Operation Becomes The Main Expense That Directly Affects Profitability. The Energy Consumption Of One Mining Rig Consists Of The Following Components:
* GPU cards, depending on the power and mining algorithm, consume between 360 watts and 1500 watts for a rig of six to seven cards.
* The motherboard, power unit, HDD and RAM consume up to 100 watts.
* The cooling system uses from 20 watts to several kilowatts when using air conditioning systems.
So, how can a miner reduce the cost of electricity? The main consumers of electricity are the GPU cards, and with the right settings, electricity consumption during mining can be reduced significantly. For example, when mining Ether, the main thing is to overclock the video memory.
The most optimal operating mode for GPU cards is setting the core voltage to about 830 to 850 millivolts for AMD cards and 650 to 850 millivolts for Nvidia cards. Lowering the voltage on the core of the card, in addition to reducing power consumption, decreases the amount of heat, which has a beneficial effect on the equipment.
Power-generating units can also use less power if they have a “gold” certificate, which means they save a large amount of electricity (about 15%) compared with power units that lack them.
Another way is to change HDDs to solid-state drives, which will increase the speed of loading the operating system and reduce the power consumption of each rig by five to 15 watts. Furthermore, modern RAM (DDR4 or DDR3L instead of DDR3) and processors can reduce consumption by another 10 to 20 watts.
A miner can also reduce consumption through slightly more complicated ways too, such as finding more economical electricity tariffs — for example, installing the rigs where there are reduced tariffs for consumers with electric stoves or electric heating and lower night-time prices.
If possible, miners can even reach out to a power plant that generates electricity to find out if it has surplus capacity. Some miners can create their own solar or wind farms and use them for mining, but not everyone can afford such an investment.
Mining In The Cloud
Keeping in mind the unstable situation in the economy, some may want to join the crypto mining community but cannot due to the high initial costs associated. Here’s where “hosted mining” can come into play, whereby cryptocurrencies are mined through a remote connection to equipment that has been rented out. Philip Salter, head of operations at Genesis Mining — a hosted mining provider — told Cointelegraph:
“Since mining is becoming more competitive, margins are shrinking and it’s harder for home miners to compete. Miners need to get every drop of efficiency they can, and that means growing the operation (economies of scale) and doing it somewhere where electricity is insanely cheap. […] Mining in the cloud seems like the only viable option for many.”
Hosted mining starts with a user choosing a provider of computational capacity. Then they enter into agreements with the company to connect to its equipment. After paying for computer capacity, miners are provided with access to remote mining of cryptocurrencies through rented equipment.
So, users only need a computer and a fast internet connection to operate. Hosted mining commissions are charged in accordance with the agreements established between the parties.
This type of mining has a number of advantages, such as not requiring start-up capital, not needing to connect equipment by yourself, no costs of maintenance and electricity, the ability to disconnect from work at any time, and not needing special technical knowledge and skills.
There are also risks in cloud mining, primarily because, like any young industry, many rogue actors seek to take over the funds of ignorant users. So, when choosing a platform, users should spend time and carefully study its history and reviews.
Also, hosted mining brings in lower income compared with mining using one’s own equipment. Nevertheless, this is a possible option for those who really want to get involved in mining because, in any case, no one will give up an opportunity for passive income, even if it’s not too significant.
Build It On Your Own
In summary, it can be said that today, mining seems to be an attractive way to make some income. If for some reason hosted mining is inconvenient, then setting up a personal rig is not too difficult. This will require an initial investment and a little time to figure out how the system operates.
Randy Ready, CEO and chief technology officer of Mining Rig Rentals — a hardware mining rental platform — believes that building your own system certainly is more interesting, adding: “I suggest going with a small rig and potentially going larger once you are familiar with mining and have a stable profit.”
Crypto mining giant Bitmain is launching two new models for its Antminer range of bitcoin mining devices, one of which is its most powerful yet.
Announced Friday, the Antminer S17e has a hash rate (mining power) of 64 terahertz per second and a power efficiency of 45 joules per TH.
The numbers compare favorably with the current most powerful model on sale. According to the Bitmain website, that’s an S17 with 53 TH/s and an efficiency rating of 45 J/TH in normal power mode.
The second new Antminer, the more budget-friendly T17e, provides a hash rate of 53 TH/s and power efficiency of 55 J/TH. This one appears to offer identical hashing power and lower efficiency to the 53 TH/s (45 J/TH) S17 model already on sale, but at a lower price point.
In Its Announcement, Bitmain Says:
“Both new models have been designed for more stable operations in the long-term to reduce maintenance costs for customers. This is made possible through the dual tube heat dissipation technology which improves how efficiently heat dissipates.”
They are also loaded with new software said to be “more secure” than previously in order to to prevent “malicious attacks.”
The new models will be sold in three batches from today till Sept. 11, and will be shipped through November.
The China-based miner maker is also saying it will compensate buyers with coupons if they should suffer a late delivery for the “e” models, “based on PPS rewards of the mining pool (electricity cost deducted).”
Bitmain To Launch Platform For Connecting Miners And Farms In October
Chinese crypto mining hardware giant Bitmain will launch a platform connecting global crypto miners with farm owners in October.
World’s First Resource To Connect Farms And Miners
The platform, dubbed World Digital Mining Map (WDMM), will be officially launched during the World Digital Mining Summit (WDMS) taking place in Frankfurt between Oct. 8 and Oct. 10, Bitmain announced in a blog post on Sept. 27.
According to the announcement, the WDMM will be the first global network to connect mining hardware owners with mining farms who will provide the available power resources to host them for a fee. In turn, network members will get access to a number of personalized services from Bitmain, including assistance with mining farm design, connections to foreign clients to host, and support with operations, purchasing, and construction.
Listing Applications During WDMS
In order to apply to be listed on the WDMM, mining farm owners will need to provide data on their current mining facilities and capacity to host other miners. Mining farm owners will be able to apply for listing on the WDMM during the WDMS event, the post notes.
Matthew Wang, Director of Mining Farm of Bitmain, stated that the WDMM will help make crypto mining more sustainable in the long term by providing a whole new way for connecting mining farms and hardware owners. Wang outlined the Bitmain’s commitment to leverage on-going support to miners throughout their hardware’s lifetime and to support the overall progress in the industry.
Top 10 Mining Farms
Additionally, Bitmain also plans to announce the winners of the world’s top 10 mining farms during the WDMS. According to the project’s website, winners will receive official certification and VIP tickets for the WDMS. According to the report, voting for the Top 10 Mining Farms is still open.
On Sept. 9, Bitmain launched two new Application Specific Integrated Circuit (ASIC) miners, the S17e and the T17e. According to the specifications, The S17e model has a hash rate of 64 TH/s and operates with a power efficiency of 45 J/TH, while the T17e offers a hash rate of 53 TH/s and a power efficiency of 55 J/TH.
Bitmain Launches ‘World’s Largest’ Bitcoin Mining Facility In Texas
Chinese cryptocurrency hardware manufacturer Bitmain has opened what it claims is the “world’s largest” facility for Bitcoin (BTC) mining in Rockdale, Texas.
In a news release published on Oct. 21, Bitmain revealed the project had been completed together with the Rockdale Municipal Development District and Canadian technology firm DMG Blockchain Solutions.
Pledges To Boost The Local Economy
The news release places a strong emphasis on working with the local economy of Rockdale, which is located in Milam County, east of Austin.
The facility — currently developed to a current 25MW capacity, with a 50MW facility remaining under construction — sits on a 33,000-acre site and can expand to a capacity of over 300MW in the future.
The site is reportedly owned by the Aluminum Company of America, Alcoa, and formerly served as the location for a smelter.
DMG, which is to provide hosting and management services for the Texas facility, will cooperate with Bitmain to expand the facility’s capacity and ensure the efficiency of the site’s mining operations.
Both firms will work closely to establish the facility’s on-ground team together with the local workforce commission, the Rockdale MDD.
Bitmain says it is committed to seeking local Rockdale suppliers to support the ongoing construction work and will also purchase energy directly from Rockdale’s electric grid operator, the Electric Reliability Council of Texas.
Aside from supporting the local economy, Bitmain also plans to launch educational programs and training on blockchain technology and mining data center operations, together with the Rockdale school district.
“Significant” For Bitmain’s Global Expansion Plans
As previously reported, Bitmain’s plans for its Texas site was first announced in Aug. 2018.
At the time, Bitmain said it expected to create 400 local jobs in the first two years, quoting $500 million as its total planned investment into the economy over an initial period of seven years.
This January, local reports alleged that the project was being downscaled, with reports of staff layoffs and suspended operations. Adverse market conditions were thought to be the reason for the purported cooling-off.
Clinton Brown, Rockdale Lead Project Manager for Bitmain, has today said the facility’s launch is “significant to Bitmain’s global expansion plans” and that the state’s stable and efficient energy resources will be fundamental to supporting what he believes is set to be the inevitable scale of growth of the mining industry.
Bitmain Quietly Files for Deutsche Bank-Backed IPO in the US: Report
China-based mining titan Bitmain Technologies has discreetly filed an application for an Initial Public Offering (IPO) with the United States Securities and Exchange Commission (SEC).
According to an Oct. 30 report from Tencent News citing anonymous “informed sources,” German multinational Deutsche Bank is sponsoring the application. The amount sought to be raised by the offering has not been specified.
Deutsche Bank Reportedly Sponsoring The Application
Tencent News further reports that the IPO plans have been dominated by Bitmain co-founder Jihan Wu and Chief Financial Officer Liu Luyao.
To bolster chances of success, the firm has purportedly hired Zheng Hua, former Nasdaq representative for China, as a consultant to the firm.
The SEC’s review process will reportedly entail three rounds of inquiries and last an estimated minimum of 1-2 months.
A further unnamed industry source, reportedly familiar with the SEC’s listing procedures, told Tencent:
“The SEC has no biased position toward the blockchain business, but is rather concerned about professional and technical issues.”
The source claimed that the company’s connection to the Bitcoin (BTC) fork Bitcoin Cash (BCH) is likely to be the largest obstacle facing the application.
Industry onlookers will remember Bitmain’s earlier, ill-fated attempt to file a major $3 billion IPO on the Hong Kong Stock Exchange in September 2018, which lapsed after multiple controversies this March.
This week has been another eventful week for Bitmain with Jihan Wu revealing that fellow co-founder Micree Ketuan Zhan had left the company amid signs of internal company drama.
On Oct. 28, rival Chinese mining firm Canaan Creative filed for an IPO with the U.S. SEC to raise $400 million, eyeing a listing on Nasdaq under the ticker CAN.
Earlier this month, Bitmain opened what it claims is the “world’s largest” facility for Bitcoin mining in Rockdale, Texas.
Leaked Transcript Details Power Struggle Inside Bitcoin Mining Giant Bitmain
A partial transcript of an internal meeting at Bitmain on Tuesday details a long-running power struggle that led to the sudden ousting of co-founder Micree Zhan.
The conflict between Zhan and fellow co-founder Jihan Wu came to a head in December 2018 as the company pursued a round of layoffs.
In Tuesday’s emergency meeting called by Wu, he admitted the company has had a subpar 2019, exacerbating tensions among top executives.
The abrupt dismissal of Zhan comes just one week after Bitmain filed for another IPO attempt in the U.S., according to a report by Tencent News.
A transcript of a Bitmain staff meeting reveals an ugly power struggle inside the world’s biggest bitcoin miner maker that led to the abrupt ousting of co-founder Micree Ketuan Zhan.
CoinDesk has obtained and verified a partial transcript from the hourlong meeting on Tuesday. In it, Jihan Wu, a co-founder of Bitmain who started the company with Zhan in 2013, explained to all employees why he thought it was necessary to oust his long-time partner and former co-CEO.
After stepping down from day-to-day management in December 2018, Wu returned Tuesday as chairman of the company and executive director of the Beijing Bitmain subsidiary. He immediately made his presence felt.
Earlier in the day, Wu notified staff that Zhan had been dismissed from all his roles, effective immediately. During the subsequent all-hands meeting, he described a falling-out between the two executives late last year.
“Zhan escalated what should be a disagreement on an ordinary company business decision to the level of power struggle,” Wu told the staff.
Wu said in Tuesday’s meeting that he and Zhan have butted heads since 2015.
However, things came to a head in December 2018 when Bitmain decided on a round of major layoffs. Wu pushed for the layoffs, while Zhan initially resisted.
According to Wu, he and three other founding members of Bitmain tried to persuade Zhan to reach a unanimous decision on the layoffs, which Wu and others viewed as necessary for saving the company.
Zhan remained unconvinced, however, and tried to rally other senior and mid-level management against the layoff plan, Wu said, only to find out that most supported it.
Wu Said In Tuesday’s Meeting:
“Everyone knows in 2018, the company spent unnecessary and hasty investment everywhere on research and development projects and hiring dozens and hundreds of people without a second thought. Everyone supported the layoffs.”
Still, Zhan ordered a second meeting on Dec. 17, arguing that he should be the sole CEO and threatening to void stock-option incentives for whoever wouldn’t back him up.
In the end, Zhan’s second attempt failed, Wu said, but the two came to an agreement to both step down as co-CEOs and Bitmain moved ahead with the layoffs.
“I know Zhan is an insecure person and can be bitter. I chose to take a further step back and let him take the glory role of chairman,” Wu said in the meeting.
However, the turmoil caused serious divisions within the company and spooked Bitmain’s trading partners, at a time when the crypto market was at its bottom, according to Wu’s account.
“Right on that day, we had suppliers calling us to push for clearing accounts payable. The Bank of Beijing already agreed to give us credit lines but that got cut the next day,” Wu said, adding:
“Had it not been the bounce-back of the bitcoin price in later months … the company may not have been able to weather through the winter last year.”
2019 hasn’t been great for Bitmain, Wu said in Tueday’s internal meeting.
Even with bitcoin’s price rebound, Wu said the company didn’t fully seize the moment.
“Our mining equipment’s market share is declining,” he said. “Our mining pools’ dominance is also declining.”
Indeed, Bitmain’s major rival miner makers including Canaan, WhatsMiner and InnoSilicon have all been able to increase sales following the market boom this year.
Meanwhile, BTC.com and Antpool, Bitmain’s flagship mining pools, lost their long-time dominant positions to Poolin – founded by former BTC.com creators – and F2Pool. Poolin and F2pool are currently the top two mining pools in the world, based on the real-time hash rate distribution.
Calls to Zhan’s mobile number, as well as subsequent text messages requesting comment, were not answered. However, a Tencent News report said on Wednesday that Zhan has already started approaching lawyers in an aim to bring a lawsuit against Bitmain.
A spokesperson for Bitmain would not comment.
Wu and Zhan seem to have sparred over what Wu called Zhan’s “crazy” ideas – namely doubling down on the company’s artificial intelligence (AI) business, which is unrelated to bitcoin mining.
According to Wu, some of Zhan’s ideas included getting finance and accounting employees in Shenzhen to take up sales roles for AI products.
“Who will be handling our book in Shenzhen? How are we going to present the financial data for [an] IPO?” Wu asked, adding:
“Recruiting 300 fresh graduates? How many staff do we have right now? Do we have sufficient resources to train them if we recruit this many people in one shot?”
He further alleged that Zhan recently proposed investing more in a business that was already “distressed” and had burnt out the firm’s core developers who are “sick at home.”
“AI is a venture investment for Bitmain,” Wu said. “It still needs a considerable amount of investment. We have to keep making money from our main business in order to have the venture investment in AI.”
“Some said inside the company, I’m the one who handles business and Zhan handles technology. I want to ask, between Zhan and I, who really has a love for the technology? Zhan doesn’t love technology, he loves that feeling of fulfilling his endless desire for power. He doesn’t love technology, he loves vanity. Folks, we have no options but to keep Zhan away from this company.”
According to the Tencent News report, Bitmain has already filed an application in the U.S. seeking to go public again. The confidential filing was reportedly submitted one week before what the news outlet described as Wu’s coup.
The report added that on Oct. 28, one day before Wu’s email, Zhan was still attending a conference in Shenzhen on behalf of Bitmain to promote its AI products.
Zhan returned to Beijing after the news broke on Tuesday, but has been barred from entering the company’s offices, Tencent News said.
However, a major question remains unanswered: How did Bitmain manage to dismiss Zhan from all of his roles given that he was the chairman and major shareholder?
Prior to the December 2018 shake-up, Zhan held 36 percent of Bitmain’s holding company while Wu had just 20.25 percent, according to Bitmain’s 2018 IPO filing in Hong Kong citing data from September 2018.
Other major shareholders include founding members Yuesheng Ge (4.18 percent), Zhaofeng Zhao (6.26 percent), and Yishuo Hu (4.18 percent), as well as a trust that held 18.47 percent as the company’s employee stock-option incentive.
Other major external shareholders include Sequoia China Capital (2.7 percent), Richway Investment Limited (1.17 percent) and Sinovation (1.13 percent).
Bitmain Expands In South America As Its Market Share Drops To 66%
Bitmain, the world’s largest cryptocurrency mining firm, is expanding its distribution in South America by partnering with two crypto mining consulting firms.
The Chinese mining mogul will extend its global exposure with Fastblock, which will be the primary distributor in Brazil, and Bit5ive, a Miami-based firm that will be distributing Antminers to over 30 countries in Latin, Central America and the Caribbean, Bitmain announced Dec. 12.
Quick Take On Bitmain’s New Distributors
Bit5ive provides major crypto mining services — sells, hosts and supports crypto mining hardware — since its foundation in 2013. The company will be distributing Bitmain’s products using the official distributor license in South America, Bit5ive’s CEO and co-founder Robert Collazo noted.
Fastblock, which has been providing mining consulting services since 2014, intends to bring its blockchain expertise from managing over 20 mining plants, according to the firm’s CEO and co-founder Bernardo Schucman.
Antonio Oliveira, senior vice president and CTO at Bit5ive, declined to comment on the numbers or client purchase regions in an email to Cointelegraph.
Fastblock hasn’t responded to Cointelegraph’s attempts to reach out at the time of publication. This article will be updated pending any new information.
Bitmain’s Market Share By Hashrate Reportedly Dropped From 75% To 66%
The news comes amidst new reports revealing that Bitmain’s market share by hashrate has dropped from around 70% to 66% from June to early December 2019. The data comes from the study “The Bitcoin Mining Network” by London-based digital asset manager CoinShares shared with Cointelegraph Dec. 12.
Meanwhile, Bitmain’s own estimations claim that the company’s market share accounted for 75% of the global crypto hardware market as of 2017, the report notes.
While the Chinese giant’s dominance over crypto mining market has slipped since 2017, the overall trend of growth in China has continued. As reported by Cointelegraph, Chinese Bitcoin miners now control as much as 66% of global hash rate, which is the highest recorded by CoinShares since the firm started monitoring the measure in 2017.
Canaan’s Post-IPO Stock Plunge Reveals Sales Slump, Price War With Bitmain
Cryptocurrency mining computer-maker Canaan Inc. may have picked the worst time for its initial public stock offering, which valued the company at $1.3 billion.
The stock price has declined in all but four of the first 17 trading sessions since the Hangzhou-based company’s Nov. 21 sale of $90 million of U.S. shares. It’s down 35 percent since the start of last week.
Canaan’s performance is being closely monitored in the cryptocurrency industry. It was the first big maker of data-mining computers to sell shares publicly and its valuation serves many investors as a sector bellwether. The shares have tumbled even as the price of bitcoin, the largest cryptocurrency, has been mostly stable over the past month, currently around $6,500.
Its stock price drop is taking place “as bitcoin miners face a challenging environment,” wrote research firm TradeBlock in a report last week. CoinDesk reached out to Canaan’s management but no response was received as of press time.
Industry executives say the big makers of bitcoin-mining computers, colloquially known as “rigs,” are in a sales slump. That’s a surprising development since many observers predicted a frenzy of upgrades ahead of bitcoin’s once-every-four-years mining-reward halving, expected in May. When that happens, the reward for successfully mining a new block of data will get cut in half. It’s widely expected that prior-generation mining rigs will become unprofitable for operators who don’t have access to unusually cheap electricity.
Bitmain, the dominant industry player, recently announced a series of sales incentives to move backlogged or stale inventory, including promising limited price guarantees to buyers willing to commit to bulk purchases and in some cases renting out second-tier mining rigs under profit-sharing agreements.
Hashing Out Information On Their Own
It doesn’t help that investors are flying blind: According to the data provider FactSet, the stock has attracted no analyst coverage from Wall Street brokerage firms, forcing traders to generate their own models of the company’s profitability based on publicly available crypto-industry metrics like hashrate – a gauge of the amount of computer-processing power working to confirm new data blocks on the bitcoin network.
Over the past week, the bitcoin network’s hashrate has averaged about 90 quintillion operations, or exahashes, per second. Just a couple months ago, it hit an all-time-high around 100 exahashes per second, after averaging about 40 exahashes per second at the start of the year.
Matt D’Souza, co-founder and CEO of Blockware Solutions, which brokers mining-rig purchases, says that the surge in bitcoin’s hashrate during the first eight months of the year was a sign that operators were upgrading to faster, more efficient machines – leading to an increase in the network’s collective computing power.
The upgrades continued for several months even after bitcoin’s price peaked around $13,000 in late June.
But now, D’Souza says, miners are becoming somewhat more reluctant to invest in new machines until they see signs that bitcoin prices might start rising. That’s evident from the recent stall-out in the hashrate’s growth.
“They need to be assured that they’re in an environment for long-term profitability,” D’Souza said. “That’s why some of these guys have stopped buying.”
Bitmain managed to build a dominant market share in the crypto industry, partly thanks to the runaway popularity of its S9 Antminers. But those are now at risk of becoming obsolete, and in recent months Bitmain has cut prices steeply on some of its top-selling models, D’Souza said.
Mike Maloney, chief financial officer at Coinmint LLC, a private cryptocurrency mining firm, says that the ultimate prize for these manufacturers is winning the loyalty of a growing cadre of large-scale miners who can shop for rigs in bulk and negotiate contracts for cheap electricity.
“This is a trend that we’re going to be seeing in bitcoin mining,” Maloney said in a phone interview. “Bitmain is taking the lead.”
Canaan has scheduled the release of its next-generation rig, the AvalonMiner 11 series, for early next year. But that machine is expected to be less power-efficient than the Bitmain S17+ model, which is already out, said D’Souza.
According to Bitmain’s website, its top-priced S17+ model, which ships in seven days for $1,930, can produce 73 terahashes (trillion operations) per second, at a power efficiency of 40 joules per terahash.
Canaan’s top-priced model, according to its website, is the “February batch” of the AvalonMiner A1166-68T machine for $1,978, providing 68 terahashes per second at an efficiency of 47 joules per terahash. In this case, a higher efficiency rating is worse, because it indicates more power usage and thus a higher operating cost.
“They’re in a tough position,” D’Souza said of Canaan. “They need cash and that’s because they need to upgrade their hardware and stay competitive with Bitmain.”
The Risks Were Disclosed
Canaan is led and controlled by its CEO and chairman, Nangeng Zhang, who was 36 at the time of the IPO, according to an offering prospectus filed with the U.S. Securities and Exchange Commission. Nicknamed “Pumpkin,” he received a master’s degree in software engineering from Beihang University in 2010, and from September 2010 through October 2013 he was pursuing a Ph.D. degree at the Chinese university.
As early as 2013, Zhang and his team were pioneers in the use of an advanced type of microchip known as application-specific integrated circuits, or ASICS, to mine for cryptocurrencies, according to the prospectus.
The offering was structured so that Zhang would own 15 percent of the total shares outstanding but retains about 73 percent of voting rights through his sole ownership of 356.6 million of the company’s class B shares, according to the filing. The IPO valued his stake on paper at more than $213 million, but the share-price slump has already cut that figure by about $96 million.
Even as Canaan prepared for the November IPO, its revenue this year was declining, and its costs were expanding: The company’s revenue during the first nine months of 2019 was just $134.2 million, down from $378.5 million during all of 2018; operating costs rose to $57.5 million during the first nine months of this year, from $52.5 million for all of last year.
The investment bank Credit Suisse, initially hired by Canaan to lead the U.S. IPO, dropped off of the underwriting team just weeks before the share sale, regulatory filings show. According to a Nov. 20 prospectus, Citigroup led the remaining team of seven underwriting firms, which also included the cryptocurrency-focused financial firm Galaxy Digital.
According to the filings, the deal was also downsized in the final weeks before the sale from an initial maximum target of $400 million.
Canaan disclosed in the prospectus that it planned to use the proceeds from the stock offering for research and development related to new computer chips and to expand its artificial-intelligence and blockchain business globally, “making strategic investments and establishing overseas offices.”
To its credit, the company also disclosed the risks when the market turns anemic. “Excess inventories, inventory markdowns, brand-image deterioration and margin squeeze caused by declining economic returns for miners or pricing competition for our bitcoin-mining machines could all have a material and adverse impact on our business, financial condition and results of operations,” according to the prospectus.
Analyzing bitcoin-mining computer stocks remains a murky practice. Just like manufacturers of oil rigs and mining bulldozers, they face the ups and downs of commodity cycles. Or rather, cryptocurrency cycles.
Canaan’s New 5-Nanometer Chips To Escalate ASIC Arms Race With Bitmain
Chinese mining application-specific integrated circuit (ASIC) manufacturer Canaan will launch new, improved mining machines with 5-nanometer chips in Q1 2020.
Chinese industry news outlet 8BTC reported on Dec. 24 that the new ASICs will have significant advantages compared to the previous generation. The new firm’s 5nm manufacturing process is expected to improve performance, power and area scaling.
A significant development
The company expects to scale the production of this new product series faster than it did with its 7nm chips. The number of nanometers refers to the size of the features of the silicon chip, 5nm approaches what is possible with conventional electronics. For scale, 1nm is approximately equivalent to the width of two silicon atoms.
As the features in chips become smaller, it becomes possible to fit more transistors in a silicon die of the same size. At the same time, the electric current has to travel less distance in the circuit to perform a calculation, which means that efficiency is improved and the amount of heat is decreased when the features are smaller.
Canaan is one of the few cryptocurrency-related companies that managed to go public with a $90 million Initial Public Offering (IPO) held in November. As Cointelegraph recently reported, the firm’s shares have seen a 40 percent drop in value since the IPO.
Ousted Co-Founder of Crypto Mining Firm Bitmain Opposes Layoffs
Micree Ketuan Zhan, the co-founder of Bitmain who was recently dismissed by Bitmain’s current CEO Jihan Wu, has publicly opposed layoffs at the firm.
As Bitmain — the world’s largest cryptocurrency mining firm — is reportedly planning to cut its workforce by 50% before the next Bitcoin (BTC) halving, Zhan claimed that he is “firmly opposed to layoffs” in a Jan. 6 Weibo post addressed to Bitmain employees.
Zhan Argues That Bitmain Cannot Lose Its Leadership In A Highly Competitive Market
Apart from claiming that Bitmain does not need to lay off its team, Zhan argued that such a move would basically be suicide for the company. He wrote:
“To all employees of Bitmain: I am firmly opposed to layoffs! We don’t need to lay off people! We cannot play suicide!”
Zhan argued that Bitmain’s cash flow is healthy, and “there is a substantial amount of virtual cryptocurrency.” Zhan, who is Bitmain’s biggest shareholder with a reported 60% stake, outlined the company’s leading position in the highly competitive cryptocurrency mining market. He stressed that cutting Bitmain’s staff in half would just allow other mining firms to grab up Bitmain’s market share.
Bitmain Reportedly Started Cutting Staff This Morning
Meanwhile, Bitmain “staff optimization” allegedly started this morning, according to local reports on Jan. 6. Bitmain has reportedly provided its employees with a compensation plan, while some employees have signed a termination agreement. Additionally, a number of headhunters have purportedly started communicating with resigned Bitmain employees.
When reached for comment, a Bitmain spokesperson stated, “Depending on market conditions and business developments, we continue to make adjustments to our staff. As a result, we also are continuously on the lookout for new talent and welcome applicants from all walks of life.”
The news brings a fresh twist in a series of events referred to as “Bitmain Drama” by the crypto community. After Zhan was dismissed by Bitmain CEO Jihan Wu in November 2019, the executive subsequently initiated court proceedings against the company in a bid to restore his voting control of the firm.
Meanwhile, Wu recently resurfaced as Bitmain CEO after both he and Zhan announced plans to step down from their co-CEO positions in January 2019.
Bitcoin Miner Canaan’s Shares Valued At $8.04 After Surging 80%
After steadily depreciating well into the last quarter of 2019, Canaan certainly rebounded slightly today.
The company was the first example of a large Bitcoin miner to go public on Nasdaq. However, after its initial public offering (IPO) on Nov 21, Canaan stock price values dropped nearly 40% within a few weeks.
Competition With Bitmain Helped Stocks Surge?
Some healthy competition may have helped the bitcoin miner to regain some traction in the market. Canaan came out ahead of Bitmain, another major China-based bitcoin miner, to become the first company traded in a US stock market. Unfortunately, this introduced Canaan to the United States with an IPO valued at under 75% of what was expected.
The mining giant’s stock took a beating from its original value $13 on the day of the launch to drop to $5.25 in mid-December. As of closing today, The Block reported Canaan’s shares are valued at $8.04, a surge of over 80% from its opening price of $4.42.
Canaan has been facing stiff competition from Bitmain and racing to develop technology to stay on top. Most recently, the company unveiled 5-nanometer chips to improve power and performance.
Bitcoin Mining Unit Manufacturer MicroBT Nibbles At Bitmain’s Market Share
Bitcoin miner maker MicroBT has rapidly expanded market share by selling over half a million units in 2019, chipping away at rival Bitmain’s dominance.
MicroBT sold about 600,000 units of its flagship WhatsMiner M20 series last year, Vincent Zhang, sales head of the Shenzhen-based company, said in an online panel hosted by Chinese mining pool Poolin on Thursday in a WeChat group.
These products generate a computing power of about 60 terahashes per second (TH/s) on average, he said. That means the newly delivered 600,000 units may have contributed over 30 exahashes (EH/s) of hashing power to the bitcoin network in 2019. (1 EH = 1 million TH).
Amid bitcoin’s price jump throughout 2019, the network’s two-week average computing power more than doubled from just 40 EH/s around the end of 2018 to nearly 100 EH/s in December. That’d mean close to half of bitcoin’s computing power growth in 2019 may have come from equipment delivered by MicroBT.
Zhang didn’t specify the precise average unit price of these batches, as they could fluctuate depending on bitcoin’s price over the year. But the firm’s various models in its M20 product line are generally priced between $24 to $30 per terahash, meaning the firm has brought home a high nine-figure revenue in U.S. dollars for 2019.
Bitcoin’s current computing power stands at 110 EH/s. That also means MicroBT may account for around 30 percent of bitcoin mining power sold right now, making it one of the largest and fastest-growing miner makers in the world.
Situation In Flux
Meanwhile, crypto research firm Coinshares estimated in a report on Dec. 12 that Bitmain’s dominance of sold bitcoin hash rate was about 65 percent at the time, already down from 75 percent in 2018.
But this number may already be slightly outdated as bitcoin’s computing power has since then grown by yet another 20 percent, jumping from 92 EH/s in mid December to about 110 EH/s at the moment.
Hangzhou-based Canaan Creative, maker of the Avalon miner, which went public in the U.S. in November, estimated in its IPO filing that it accounted for around 20 percent of bitcoin computing power sold for the first six months of 2019. The firm has yet to release its full-year results.
That said, Bitmain’s mining equipment still dominates the market, resulting from the successful sales of its AntMiner S7 from 2015 to 2016 and later its S9 model from 2017 to 2018.
According to Bitmain’s IPO filing in September 2018 in Hong Kong, the firm delivered about 500,000 bitcoin miners in 2015 and 2016, and further sold 3 million units from the beginning of 2017 to June 30, 2018, amid the crypto market’s bull run.
While S9s – with an average 14 TH/s computing power – are still the most widely used miners, they are facing an increasing risk of becoming obsolete as bitcoin’s halving event approaches in May, which will reduce bitcoin’s mining rewards from 12.5 bitcoin per block to 6.25.
CoinDesk reported earlier this month that mining farms have been procuring the latest and most powerful miners to expand their facilities or replace older models in preparation for the upcoming halving.
While Bitmain its latest AntMiner S17 series last year to rival MicroBT’s WhatsMiner M20 product line, the latter has significantly outrun Bitmain in terms of mass production and shipments.
The two firms are also racing to deliver even more powerful machines in 2020 ahead of the halving event, namely, the AntMiner S19 and WhatsMiner M30. That said, the actual production quantity of these products still largely depends on the supply of wafers from semiconductor companies such as Samsung or TSMC, which, according to Zhang, is “very limited.”
Meanwhile, as the coronavirus outbreak in China delays manufacturing and logistics, bitcoin’s computing power growth has stagnated for the time being. In fact, data from mining pool BTC.com estimates that bitcoin’s mining power is poised to decrease by 1.78 percent in about eight days.
Zhang said in the WeChat group that MicroBT has resumed its production.
“Currently, part of the logistics has also gone back to work. … So now the supply of miners is not a big issue but not every mining farm is physically accessible,” he said.
“Large scale of investments may be affected because investors may not be able to do physical due diligence on facilities,” Zhang said.
Ahead of Bitcoin Halving, Bitmain Announces Upcoming Antiminer S19
Leading mining hardware manufacturer Bitmain has announced two new upcoming miners — the Antminer S19 and the Antminer S19 Pro.
According to a press release on Feb. 27, the Antminer S19 will boast a hash rate of 95 terahashes per second (TH/s), and the Pro will offer 90 TH/s. However, Bitmain’s website claims that the Pro model can produce 110 TH/s.
Both miners will have a power efficiency of 34.5+/-%5 joules per terahash. No release date or price information has been announced for either model.
The S19 series will replace the Antminer S17 67 TH/s and the T17 55 TH/s as Bitmain’s flagship models. The S19s will weigh 3.5 and 4.5 kilograms heavier than their predecessors, weighing 15.5 and 16.5 kilograms. The S17 and T17 are priced at $1,567 and $939 respectively.
Bitmain’s press copy invokes the upcoming halving, stating: “with the price of block rewards to be reduced, the Antminer 19 series safeguard miners for future mining.”
Bitmain Miners Drive Riot Blockchain Expansion
On Feb. 20, the Nasdaq-listed crypto mining company Riot Blockchain announced the operational commencement of 4,000 Antminer S17s.
Riot purchased the Antminers during December 2019, 3,000 of which were deployed in its Oklahoma City facility during January. The facility is now fully operational — producing 240 pentahash per second and consuming 12 megawatts of electricity.
Competition Heats Between Bitmain And MicroBT
After years of Bitmain miners dominating hash rate, the company appears to be facing increasing competition from rival MicroBT.
MicroBT sold roughly 600,000 units of its flagship 60 TH/s WhatsMiner M20 in 2019 — outselling Bitmain’s S17 last year.
MicroBT plans to launch its forthcoming M30 with 88 TH/s capabilities, signaling fierce competition between the two companies during 2020.
Riot Reports 147% Monthly Growth In Average Daily Run Rate of BTC Mined
Nasdaq-listed cryptocurrency mining firm Riot Blockchain has demonstrated a remarkable monthly growth of average daily run rate of Bitcoins (BTC) mined, in February.
The United States-based firm has seen a 147% increase in the average daily run rate of BTC mined, against the average daily production run rate for December 2019, Riot revealed on March 5. Riot attributed the boost to its mining equipment upgrade. At the beginning of the month, it had 2,940 Bitmain S17s and 1,751 S9s machines, while by the end of the month, it was running 4,000 S17s.
Riot’s Mining Facilities Upgrade
Riot Blockchain started deploying around 3,000 new units of S17 Pro Antminers as part of the full upgrade of its Oklahoma City mining facility, in January. The company purchased the mining machines from Chinese mining giant Bitmain.
At the time, Riot anticipated that the upgrade would bring its aggregate operating hashrate at the Oklahoma City mining facility to approximately 248 petahashes per second, representing a 240% increase in hardware power efficiency compared to Riot’s mining hashrate.
Worth noting, Riot’s shares dropped by over 5% following the announcement that the company was planning to sell its cryptocurrency exchange, which was launched in the second quarter of 2019, to focus on BTC mining ahead of the halving in May of this year.
Investor Sues Crypto Mining Firm Riot Blockchain To Pay $728K In Legal Fees
An investor sued Nasdaq-listed cryptocurrency mining firm Riot Blockchain for $728,200 that the investor owes in another contract breach lawsuit.
According to court documents filed on April 3, the aforementioned sum is the money Riot Blockchain investor Barry Honig and consulting firm GRQ Consultants spent on the legal proceedings over the contracts between the parties. The filing reads:
“All of the agreements contain robust indemnification provisions which require Defendant to defend and indemnify Mr. Honig and GRQ against any subsequent lawsuits or claims ‘with respect to any of the’ securities purchases that they made, and/or ‘any violation or alleged violation by [Defendant] of the Securities Act, [or] the Exchange Act.’”
Securities Regulation Violation Lawsuits
According to the documents, in March 2017 Honig and GRQ — of which he served as a trustee — entered into securities purchase agreements and registration rights agreements with Riot Blockchain for $1,725,000 million. The next year multiple legal proceedings were moved against Honig and GRQ alleging that the securities transactions included in the contract violate the regulations. The filing reads:
“Honig vigorously denies each and every one of the claims asserted against him in those proceedings, and has expended significant sums to mount his defense.”
Still, while Honig believes the legal actions against him to be unfounded, he claims that those lawsuits trigger the indemnification obligations to him and GRQ. Riot Blockchain, on the other hand, refused to cover the legal fees in question, and the plaintiffs point out that the firm’s most recent quarterly report shows that it held over $20,324,000 of assets.
Lawsuits In Crypto
The cryptocurrency industry, as any other space with a large quantity of money involved, sees a large number of lawsuits. As Cointelegraph recently reported, seven cryptocurrency firms were targeted in lawsuits filed in the New York federal court on April 3.
Yesterday, Cointelegraph also reported that an entity representing the more than 100 victims of the alleged $35 million Q3 Ponzi scheme filed a class-action lawsuit against Wells Fargo Advisors.
Mining Issues In The Run-Up To BTC Halving
As Cointelegraph reported last month, major mining hardware manufacturer Bitmain announced two new upcoming miners — the Antminer S19 and the Antminer S19 Pro. Both miners will have a power efficiency of 34.5+/-%5 joules per terahash.
In the meantime, Alex de Vries, the founder of the Digiconomist, asserted that 98% of mining rigs will never verify a transaction, resulting in an enormous and unproductive electricity expenditure. De Vries explained:
“The shocking thing is the average lifetime of a bitcoin mining machine is one and a half years, because we have a new generation of machines which are better at doing these calculations. So the rest are just running pointlessly for a few years, using up energy, and producing heat, and then they will just get trashed because they can’t be repurposed.”
Pump And Dump Complaints Dismissed Against Crypto Mining Firm
Riot Blockchain’s lawsuits dismissed by a New Jersey judge, ending a 2 year lawsuit alleging the mining firm misled shareholders.
New Jersey District Judge, Freda Wolfson, granted seven motions of dismissal that ended a lawsuit targeting crypto mining firm, Riot Blockchain, on April 30.
The plaintiffs claimed that Riot had made false and misleading statements to its shareholders concerning its investments in crypto assets and blockchain technologies.
The lawsuit accused Riot of issuing misleading materials concerning shareholders who were selling their shares in the company, alleging that “related-party transactions” had not been adequately disclosed by Riot.
Riot Blockchain Escapes Class-Action Suit
Judge Wolfson found that the plaintiffs provided insufficient evidence to demonstrate that Riot’s press releases and public statements contained false or misleading information.
“I have examined all three categories of statements and find, for the reasons set forth below, that plaintiff has failed to adequately allege that those statements were false or misleading,” the judge said.
The plaintiffs first filed the class action against Riot, then known as Bioptix Inc, in February 2018, alleging that the firm made “material misstatements” to shareholders after the publication of a negative article from CNBC.
The judge noted that the lead plaintiff may refile a revised suit within 30 days of the order.
Riot Purchases 1,000 Anterminer S19’s
Also on April 30, Riot Blockchain announced that it had purchased 1,000 Bitmain Antminer S19 Pro ASIC miners for $2.4 million.
During April, Riot announced that it had struck a deal to relocate a portion of its mining operations into a New York facility operated by fellow mining firm Coinmint. The agreement saw recently purchased Antminer S17s moved from Riot’s Oklahoma facility.
The deal came after the mid-March crypto crash impacted the profits of many mining operations.
New York Power Plant Mines $50,000 of Bitcoin A Day
A New York power plant turns to Bitcoin mining in a successful bid to increase profitability.
Bloomberg reported on Mar. 5 that a power plant in New York’s Finger Lakes region now mines about $50,000 of Bitcoin (BTC) each day using the electricity it produces.
Atlas Holding, the private equity company that owns the facility, installed 7,000 crypto mining machines at the Greenidge Generation’s 65,000-square-foot power plant in Dresden, New York. The firm pointed out that since it produces the power consumed by the machines on its own, the mining operation is extremely low cost.
An Extremely Profitable Operation
Cryptocurrency mining is extremely energy-intensive. Mining facilities tend to concentrate where electricity prices are the lowest. In this case, the power cost is equivalent to production costs.
Atlas Holding’s mining operation consumes about 15 megawatts of the 115 megawatts of the power plant’s total capacity. In the past, the Dresden power plant used to operate only when there was higher-than-usual energy demand during summer and winter, but now it operates the whole year.
Bitcoin Block Reward Halving Is “Favorable”
The cryptocurrency community is afraid that Bitcoin mining will become unprofitable for most miners after the block reward will be cut in half in about little over two months. Dave Perrill, the CEO of colocation service for crypto miners, recently told Cointelegraph that the profitability of all but the most efficient mining operations will be greatly challenged after the halving takes place.
Still, the profitability of Atlas Holding’s mining operation is high enough to be safe after the block reward cut. Greenidge’s chief financial officer Tim Rainey said that he expects the operation will stay profitable after Bitcoin’s halving:
“We are in a favorable market position regardless of how the halving materializes. […] Due to our unique position as a co-generation facility, we are able to make money in down markets so that we’re available to catch the upside of volatile price swings.”
Canaan Faces Class Action Lawsuit Alleging Dubious Practices During IPO
Blockchain services and cryptocurrency mining hardware producer Canaan is facing a class-action lawsuit filed by investors following claims of dubious practices for attracting investments.
Investor rights-focused law firm Rosen Law Firm has initiated the suit on behalf of Canaan securities purchasers in the company’s initial public offering (IPO). The law firm claimed that Canaan investors suffered damages as the firm had made false and misleading statements and failed to disclose a number of issues.
Canaan Allegedly Misled Investors Regarding A Partnership
According to the announcement, Canaan did not reveal to its investors that a purported “strategic partnership” — apparently with Hong Kong Exchange-listed company Grandshores (HK 1647) — was actually a transaction with a related party. Also, Canaan allegedly did not provide the investors with correct information about its financial condition, which was allegedly been worse than was reported. Among other allegations, the lawsuit said:
“The company had recently removed numerous distributors from its website just prior to the IPO, many of which were small or suspicious businesses; and (4) several of the Company’s largest Chinese clients in prior years were clients who were not in the Bitcoin mining industry and, thus, would likely not be repeat customers.”
Rosen Law Firm is seeking restitution for affected investors.
Canaan carried out its IPO last November, wherein it raised $90 million — more than 75% less than was expected. Canaan has initially planned to raise considerably more, with a funding figure of $400 million circulating prior to the event.
The failure was purportedly a result of losing Canaan’s biggest banking partner, Credit Suisse, just a week before the IPO.
An Investigation Into Claims Against Canaan
Additionally, a shareholder rights litigation firm, The Schall Law Firm, has begun an investigation into purported violations of securities laws by Canaan. The law firm states that it is acting on behalf of Canaan investors and aims to indicate whether Canaan actually issued misleading statements and failed to disclose information pertinent to investors.
Both the investigation and lawsuit came in the wake of an analysis produced by Marcus Aurelius Value, which argued that the ASIC manufacturer had misrepresented its potential revenue for 2020 and that at least one of its customers is an alleged related party who is unable to honor a $150 million purchase contract.
The analysts based their claims on a highly irregular transaction relating to Canaan’s IPO on Nov. 27. This refers to the $150 million deal between Grandshores one month before the IPO, which would represent an equipment order almost equal to Canaan’s revenue in the past twelve months, which amounted to $177 million.
The analysts argued that Grandshores had no way of honoring the agreement, citing the company’s $50 million market capitalization and $16 million cash balance.
AsicBoost Dominates Bitcoin Mining, Solving Bitmain’s 2017 Controversy
Bitcoin (BTC) miners openly using AsicBoost are now comprising 63% of its network hashrate. This vindicates community concerns from 2017 that accused Bitmain of using the “covert” version of AsicBoost.
The statistic was highlighted on March 9 by Bitmex Research, building on a similar report from December 2018. Though the overt AsicBoost was only used by 30% of miners at the time, the analysts argued that the 2017 controversy was largely settled. They wrote:
“If covert AsicBoost was used by some miners to obtain a secret advantage, with significant adverse effects on Bitcoin, this problem now appears mostly solved.”
Bitmain was the target of strong criticism from notable Bitcoiners in 2017 after it allegedly introduced covert AsicBoost into its hardware. The company was also chastised for opposing the network’s Segregated Witness (SegWit) upgrade — a proposal which would have limited the usefulness of their covert AsicBoost tactics.
What Is AsicBoost?
AsicBoost is the name of a technique developed by cryptography experts, Timo Hanke and Sergio Lerner. The solution was patented under a framework named “Blockchain Defensive Patent License,” which was specifically designed to limit competitive advantages in mining and preserve network security.
In a Proof of Work system, miners must generate a cryptographic hash of some important block information, which is contained in the block header. In order to make it a difficult task, the hash must satisfy the “difficulty” condition, which generally requires it to be lower than a certain number. Since hash functions are completely unpredictable, the only way to satisfy the condition is to simply try many different combinations of input data.
AsicBoost exploits the fact that Bitcoin block hashes are created from separate chunks of 64 bytes of data. Since the entire header is 80 bytes, there are two chunks that need to be hashed during the mining procedure.
With the technique, one of the chunks can remain unmodified over multiple hashing attempts, which saves resources. The difference between overt and covert AsicBoost lies in which chunk is kept unchanged.
Under overt AsicBoost, the “version” bytes are used as an extra nonce to modify the resulting hash. Thus, the second chunk does not change for a number of attempts.
With covert AsicBoost, miners need to shuffle or even remove transactions in order to keep the last four bytes of the Merkle root — the signature of the block’s transactions — unchanged.
While the latter technique is less efficient, it is more difficult to detect and thus would allow a miner to maintain a competitive advantage. Crucially, the activation of SegWit would have broken the exploit.
Bitmain Criticized For Using Covert AsicBoost
In April 2017, news broke that Bitmain had implemented the covert AsicBoost exploit in its hardware. The discovery was made by Gregory Maxwell, at the time CTO of Blockstream.
The findings were used by the community to allege that Jihan Wu — Bitmain CEO and strong SegWit critic — had ulterior motives for his position.
AsicBoost was estimated to increase mining performance by 20-30%. Andreas Antonopolous and others argued that covert AsicBoost would eventually destabilize the network, as some miners would have an unfair advantage.
Bitmain Cleaning Up
The ever-increasing figure of overt AsicBoost miners, currently at about 63%, means that the advantage of using it covertly is dwindling.
Even if there are fewer incentives of foul play now, in a conversation with Cointelegraph, Kristy Leigh-Minehan noted that Bitmain “cleaned up its act” in preparation for the initial public offering (IPO).
The initial plans of the 2018 IPO were thwarted by a protracted bear market. Though a new attempt in late 2019 was discovered, internal company issues prevented it from continuing.
The pressure from the Bitcoin halving has allegedly forced Bitmain to slash over 50% of its staff. Even though some may have hoped for a halving-induced rally, the already-significant cut may not be enough to sustain the company amid a global market panic just two months before the upcoming block reward decrease.
Huobi’s Mining Arm Records 547% Surge in Operating Revenue In 2019
Huobi, the fourth-largest cryptocurrency exchange by daily trading volume to date, saw significant progress in its crypto mining business in 2019.
Huobi Pool, a cryptocurrency mining arm of Huobi, says its operating revenues surged 547% in 2019, reaching $320 million year-over-year from $53 million in 2018.
PoS Staking Continues To Be The Huobi Pool’s Most Profitable Business
Originally launched in March 2018, Huobi Pool released its first annual financial report on March 19, announcing the news for Huobi Group’s digital assets mining business and trading pool for the fiscal year ending December 31, 2019.
Alongside major growth in operating revenue, Huobi Pool recorded notable profits. According to the report, Huobi Pool’s operating profit jumped 218% from $2.5 million in 2018 to $6.3 million in 2019.
As outlined by the company, the two main triggers for Huobi Pool’s growth in 2019 were Proof-of-Stake (PoS) and Proof-of-Work (PoW) mining. Having accounted for 35.62% of the total net income, PoS continues to be the Huobi Pool’s most profitable business segment so far, the firm noted. Huobi Pool also projected that PoS will continue to be a focus in 2020.
PoW Consensus Is Also Still Contributing To Total Net Income
As reported by Cointelegraph, PoS is a consensus blockchain algorithm that operates on the basis of the validator’s stake in the network. PoS is opposed to PoW, which relies on physical miners instead of network validators.
Despite some blockchain projects like Ethereum trying to get rid of PoW consensus, the algorithm is apparently still profitable to date. According to Huobi Pool’s latest report, at least 23.5% of the firm’s total net income in 2019 was contributed by PoW mining. Additionally, PoW mining became one of the fastest-growing business segments of 2019 for Huobi Pool, as its Bitcoin (BTC) hashrate reached a high of 6,578 PH/s.
In the report, Huobi Pool also highlighted its Huobi Pool Token (HPT) as a central part of the company’s business model. In contrast to Huobi’s native token Huobi Token (HT), Huobi Pool Token is specifically designed for the company’s mining arm, acting as a reward mechanism for hashrate contribution as well as a way for users to participate in Huobi Pool developments.
As of press time, both Huobi Pool Token and Huobi Token are seeing significant surges over the past 24 hours, up nearly 15% and 14%, respectively. The growth comes amid a major green trend on crypto markets, with Bitcoin getting back above $6,200 and jumping more than 18% over a 24-hour period as of press time, according to data from Coin360.
Bitmain S19 Antminers Sell Out, Won’t Ship Until May 11
The world’s largest manufacturer Bitcoin ASIC miners, Bitmain, has sold out its first round of domestic Antminer S19 sales within 24 hours of accepting orders.
On March 23, Bitmain tweeted that it opened up its first phase of domestic sales for its long-await Antminer S19s — before selling out on the same day.
Antminer S19s Will Ship From March 11
The first version of the Antminer S19 will have a hashrate of 95 terahashes per second (TH/s) and an energy efficiency of 4.5±5% joules per terahash (J/TH), while the Antminer S19 Pro boasts a hash rate of 110 TH/s and an energy efficiency of 29.5±% 5 J/TH. The second version of both S19s will feature a reduced hashrate by 5 TH/s.
The regular S19 costs roughly $2,180 while the pro costs $2,920. Bitmain states that international sales will be coming soon.
Customers who managed to get in on the first round can expect the units to arrive between May 11 and May 20.
Bitmain Accused Of Front-Running Miners
With the Bitcoin (BTC) halving currently expected to take place on May 12, the estimated shipping dates for Bitmain’s S19s have drawn the ire of the mining community.
Many of the comments in response to Bitmain’s announcement insinuate that the company chose the date so that it could mine using its next-generation ASICs without competition before the next fork occurs.
Jason Urgo, The CEO Of Social Media Analytics Company Social Blade, Posted:
“Shipping May 11thish. Gee I wonder why you picked that date lol. I thought you guys said you didn’t use them yourself first before shipping them? Or is it just to make sure the ones you do have for you get the most out before you ship these.”
A user posting under the pseudonym ‘dua’ sarcastically added: “They don’t use it. They just stress test it for a ‘while’ for Quality assurance.”
Cointelegraph reached out to Bitmain but had not received a response as of press time. This article will be updated should a response come in.
Bitcoin Miner Maker Canaan Lost $148M in 2019
Chinese bitcoin miner manufacturer Canaan Creative disclosed a net loss of $148.6 million for 2019 on revenue of $204.3 million, reflecting declining profitability over the past three years.
On Thursday, the firm released its first unaudited earnings report since going public in the U.S. in November. Canaan said it sold computing power totaling 10.5 exhashes per second (EH/s), which accounted for roughly 20 percent of the Bitcoin network’s computing power growth last year.
Since its $90 million IPO, Canaan’s share price has been on a downward trend and is currently around $3.5 per share – 61 percent below its offering price.
The firm said it recorded $114.7 million in net loss in Q4 2019 alone, which widened its $31.2 million net loss for the first nine months in 2019.
Nangeng Zhang, CEO and founder of Canaan, said in an earnings call on Thursday morning Eastern time that, although the firm recorded sales uptick in October and November, it saw a “considerable drop” in volume in December amid volatility in bitcoin’s price.
“As a result of the impact of the COVID-19 outbreak, a widespread health crisis that adversely affected general commercial activities, the economies, financial markets, as well as the cryptocurrency market activities, we have lowered our expectations for business in the year of 2020,” according to the report. “For the first quarter of 2020, the Company expects total revenues not less than RMB60 million [$8.5 million].”
Also notable in the report is the increasing ratio of the “cost of revenues” for Canaan’s sales of bitcoin miners over the past year, which leads to declining profitability. In 2019, the cost of revenue for Canaan was $278 million, $78 million more than the total revenue made for the year, largely due to inventories and prepayments write down of $104.7 million in Q4.
Canaan’s cost of revenues generally include the costs of raw material, production and logistics for the manufacturing of mining equipment, as well as write-downs of prepayments and inventories.
Selling At Loss?
To put this into perspective, in 2017, Canaan’s total cost of revenues was $100 million with no inventory write-down, accounting for 54 percent of its $183 million revenue on the back of the crypto market bull run at the time. It brought home $53 million with a 30 percent net profit margin.
In 2018, its total cost of revenues went up to $307.4 million, taking up 80 percent of its $378 million revenue. But the total cost included a write-down of $110 million in inventories because the market downturn made it hard for Canaan to sell those machines.
The increase in the cost of revenues is perhaps also due to the fact that more advanced mining equipment relies on more costly chip technology.
According to Canaan’s IPO prospectus, the cost of its Avalon 10, the latest range of miner launched to help weather bitcoin’s halving event, is around $751, compared to $354 and $600 for its older Avalon 8 and 9 series. Prices had been around $1,200 in December for the Avalon 10.
Based on information advertised by Canaan’s authorized distributors, several Avalon 10 models are currently on sale, as a buying spree from investors has cooled down in recent months.
The firm has also recently been hit with a lawsuit filed by an investor who bought its shares and then accused the company of making misleading statements about its operations and financial data, and of violating the U.S. securities laws.
New York Power Plant Sells Bitcoin Hashpower to Institutional Investors
A Bitcoin-mining power plant in upstate New York has sold 106 petahash of its computing power to an undisclosed buyer using a “hashpower contract” settled in Bitcoin (BTC).
The contract — brokered by BitOoda Digital — first launched in January with the aim of providing institutional investors to purchase large blocks of Bitcoin hashpower in over-the-counter markets.
On April 10, The Chief Financial Officer Of Greenidge Generation Claimed That The New Instrument Provides:
“The same kind of time-tested hedging capabilities seen in traditional commodity markets […] bring[ing] the benefits of clean and energy-efficient bitcoin mining from Greenidge to institutional investors throughout the United States.”
A Sweet Deal For Investors?
The Greenidge power plant uses a pipeline bringing natural gas directly to the plant, thereby generating the power consumed by its mining facility — up to 100 megawatts of energy an hour — and lowering its costs. The firm argues that this set-up offers investors a chance to tap the profitability not only of crypto, but also the energy markets.
The new, regulated contract enables investors to own Bitcoin cheaper than the market spot price, with the instrument being physically settled — i.e. delivered in the Bitcoin generated at the power plant. For Greenidge, the deal provides upfront capital for expanding its mining operations.
Resources And Mining Profitability
As recently reported, Greenidge is owned by private equity Atlas Holding, which installed 7,000 crypto mining machines at the Greenidge 65,000-square-foot power plant in Dresden, New York.
Given the forthcoming 50% reduction in rewards for mining each block on the Bitcoin network — an event known as “halving,” scheduled for May 2020 — research by TradeBlock has indicated that access to efficient mining equipment, together with cheaper electricity and resources, can help the sector to ward against losses.
Are Bitcoin Cash Miners Driving Up the Price of Bitcoin?
Bitcoin (BTC) price has been a sight to behold over the last week. After successfully breaking through the resistance of $7,200 on Monday, April 6, all eyes were on the leading digital asset to hold $7K as fresh support, but as soon as the weekend was upon us, the price fell through this floor finding a new temporary bottom of $6,750.
So are these weekend dumps a sign that interest in Bitcoin is waning? Or is this simply whales taking advantage of thinner weekend volume to accumulate before the next big run?
Bitcoin keeps finding itself in a descending channel that formed 10 months ago. The last time the king of cryptocurrencies broke out of this channel, it encountered fierce resistance at 5 different levels ranging from $8,750 to $10,500.
Currently, Bitcoin is once more above this channel, with a new ascending channel taking form. From here Bitcoin needs to form support by closing the daily above $7,100 for history to start repeating itself, and this is not the only pattern repeating itself this year.
History Repeats Itself On The MACD
The Moving Average Divergence Convergence (MACD) indicator on the weekly timeframe looks almost identical to that of Jan. 14, which is when Bitcoin last closed above the descending channel. This resulted in a rally from $9,000 to $10,500.
However, much like the last few days, Bitcoin did fall back into the channel before pushing forward to the yearly high.
At the time this was attributed to the mining difficulty increasing every 2 weeks, a trend that seems to be returning.
Mining Difficulty Pushes Higher
After the Black Thursday event, which saw the price of Bitcoin plummet by 50%, the mining difficulty adjustment dropped by nearly 16%. This was one of the largest drops in a single period that Bitcoin had ever seen.
However, last week saw the difficulty increase by nearly 6% and the next adjustment is already looking to increase by 7%. With only 8 days left to go, it’s highly probable that this will wipe out the negative adjustment seen this year, so does that mean that price will follow?
If the price action at the beginning of 2020 is anything to go by, it might suggest another big price surge is due over the week ahead.
Are Miners Dropping Bch For BTC Driving The Price?
Last week Bitcoin Cash (BCH) had its halving and this caused a lackluster price spike of about 11% before the digital asset slowly settled back to its pre-halving price. However, as a result of the halving, the hash rate dropped off a cliff as can be seen in the chart above.
The most likely reason for this drop is due to the fact that those mining Bitcoin Cash use exactly the same hardware as Bitcoin miners. So when faced with a 50% reduction in profitability it would make more sense to point your miners to the real Bitcoin.
With more miners heading to the Bitcoin network, it would entirely make sense that the difficulty would start to rise. This is something that I expect to continue happening over the next 30 days ahead of the real Bitcoin halving.
However, this will also lead to the difficulty in mining BCH to plummet, so this little dance is something that will cause some very interesting price action over the coming weeks.
If Bitcoin closes above $7,100 it will be incredibly bullish for the week ahead. Once more $7,200 is the first level of resistance, however, $7,400 and $7,700 are the next two levels holding Bitcoin back from breaking $8,000.
With the growing number of miners driving up the difficulty on the Bitcoin network, a run to $9,200 isn’t something that would be unreasonable to expect before the week is over.
It still feels like Bitcoin is recovering too soon and the pullback this weekend doesn’t seem like it was enough. Should the weekly candle close below $7,100 I would first be looking at $6,750 and $6,500 as the last levels of support before opening up mid $5k range for buyers to step in.
Oil Companies Will Dominate BTC Mining in Five Years: Marty Bent
Mining Bitcoin (BTC) has often been criticised for its exorbitant power usage, but podcaster Marty Bent has embraced a solution that he says actually reduces waste in the oil and gas (O&G) sector.
In an April 15 blog post, Bent revealed that since last year he had been mining Bitcoin with the Great American Mining (GAM) company, using excess gas formed as a byproduct of mining oil to power the rigs.
GAM deployed their first small mining operation in the form of a shipping container in an oil field last December. Bent said it was the first step in encouraging O&G producers to become “some of the biggest miners within the Bitcoin network”.
He Elaborated On The Topic In A Podcast:
“What we’re trying to do and achieve at Great American Mining is to sort of have these oil and gas companies have the ‘aha’ moment and realize that they should be investing in this and building out a mining infrastructure on their field so that they can be more efficient with their wasted gas… and overall in the long term, help Bitcoin out, help protect Bitcoin, and distribute Bitcoin further from a mining perspective.”
Bitcoin miners are looking for cheap and abundant energy sources, while O&G companies are looking to be as efficient and profitable as possible. GAM uses gas normally disposed of as a waste byproduct or sold off — sometimes at a loss — into a crypto mining energy source.
“If designed correctly, containers filled with Bitcoin miners have far superior uptime and are 5x more profitable (on average) than sending the gas to a pipeline to sell.”
Bent said there was no need to use warehouses or or build steel structures to mine Bitcoin when stacked ordinary shipping containers would do:
“You’re seeing a trend now, where even centralized locations are adopting. Instead of building like a large warehouse and doing all the infrastructure, they’re actually using the container model as the way to build on site…. a year or so ago, that wasn’t the case at all. And now you’re seeing very, very large places, you know, stack 40, 50, 60 containers… it’s just cheaper to do it that way.”
The concept is becoming more popular. The Winklevoss Twins have invested in Crusoe Energy Systems, a Texas company that converts the waste from surplus natural gas to mine cryptocurrencies. Up in Canada oil mining company Black Pearl Resources are mining Bitcoin to help offset operational costs. Another Canadian company Upstream Data sells and rents mobile mining equipment to O&G producers for the same purpose.
U.S. Doesn’t Have Much Mining Infrastructure
At present, China is the go-to destination for industrial-scale cryptocurrency mining facilities. With its affordable energy costs the country accounts for approximately 60-70% of the energy consumption from mining worldwide.
As of today, the Bitcoin network has an estimated annual electricity consumption of 73.374 TWh. As mining has become more expensive over time, its energy consumption will most likely also increase, leading entrepreneurs to look for alternative solutions.
Bent said that he believed that Bitcoin mining needed to be further distributed geographically — China currently dominates mining of the cryptocurrency. He said mining Bitcoin was a huge economic opportunity for the U.S. Oil and Gas industry:
“We are still very early in this game and on our personal journey at GAM, but we are confident that we will see this vision come to fruition over the course of the next five years. We could definitely fail (unless the government starts bailing out bitcoin miners), but we’re sure as hell going to try.”
Bitcoin Mining Hardware War Is Heating Up Ahead of the Halving
Shenzhen-based MicroBT is rolling out three top-of-the-line bitcoin miners amid heated competition with Bitmain ahead of the network’s halving event in less than 30 days.
Chen Jianbing, COO of MicroBT, announced in an online event on Friday that the three new models – the WhatsMiner M30S+, M30S++ and M31S+ – are available via both warehouse inventory and pre-orders that can be delivered in up to 30 days.
The move underscores MicroBT’s neck-and-neck competition in the multi-billion-dollar mining hardware market with major rival Bitmain, which is scheduled to deliver the first batch of its latest AntMiner S19 and S19 Pro miners in May.
At the event, Chen reemphasized MicroBT’s rapid growth in 2019, having achieved sales of 600,000 units of its WhatsMiner M20 series, which, as CoinDesk reported in February, has chipped away at Bitmain’s longstanding market dominance.
The COO said 2019 sales volume had also doubled compared with 2018, boosting its sold computing power to 35 million terahashes per second (TH/s). That accounted for 35 percent of the Bitcoin network’s total hash rate as of the end of December.
The new models add to MicroBT’s existing M30 product line, which includes the previously launched WhatsMiner M30S and M31S.
With the latest equipment from both major manufacturers soon to start shipping, the bitcoin mining hardware market is now entering what Chen called the “3X era,” referring to a mining efficiency that’s below 40 watts per terahash (W/T).
For context, W/T measures how much electricity a mining machine consumes for each terahash of computing power. Since bitcoin mining is an energy-intensive computing process, a miner with a lower W/T ratio would be able to bring home a higher gross margin.
This metric has become considerably more important given the upcoming bitcoin halving, which will reduce the amount of bitcoin earned by the mining industry in a day from around 1,800 to 900 units.
According to the firm’s specifications, the M30S+ is able to compute at a 100 TH/s with 34 W/T efficiency, while the M30S++ can compute as much as 112 TH/s at 31 W/T. The previously launched M30S is claimed to deliver an efficiency of 38 W/T.
Meanwhile, the M31S+ and the earlier M31S both deliver an efficiency of 42 W/T. However, Chen said the new model has the option to switch to a lower voltage mode in order to improve the efficiency to below 40 W/T.
To put this into perspective, by Bitmain’s specification, AntMiner S19 and S19 Pro machines are said to be able to compute at 95 TH/s and 110 TH/s with an efficiency of 34 W/T and 30 W/T, respectively.
But arguably miner manufacturers are all facing a tough time selling equipment under current market conditions, with mining operations taking a step back to wait and see how bitcoin’s price will play out after halving.
Major manufacturers have had to mark down the prices of their mining equipment following bitcoin’s price crash on March 12, the largest sell-off since 2013.
Vincent Zhang, MicroBT’s head of sales, said during the launch event the WhatsMiner M30S is now priced at $1,962 – down from around $2,500 when it was initially released. For the new models announced today, the M30S+ and M30S++ are priced at $2,740 and $3,899 per unit, respectively.
Following the recent price cuts, manufacturers such as Bitmain have also had to partially refund customers who placed pre-orders at the higher price, a policy the firm has had in place for the past several years.
Zhang said MicroBT is now also enforcing such a policy in its bid to keep customers happy. Users who have placed pre-orders at a higher price than the retail value at the time of delivery will be compensated for the difference, like with Bitmain, in cash coupons. These can only be redeemed at up to 10 percent of the value of additional goods purchased by MicroBT.
Although MicroBT gained a large amount of market share in 2019, it had issues delivering devices on the timeline it had promised to customers, suffering up to several months of delays.
Zhang said the firm will now compensate customers in cash coupons worth 0.3 percent of the value of a pre-ordered machine for each day a delivery is delayed beyond the promised date.
Also notably, MicroBT will extend its warranty policy for the M30 series to one year post-delivery – longer than the industry’s average six-month warranty period.
Next-Generation Bitcoin Mining Hardware Arrives Just In Time For BTC Halving
MicroBT has unveiled its coming series of 100 TH/s miners for the post-halving block rewards, igniting competition with Bitmain.
Bitcoin (BTC) ASIC manufacturer MicroBT has revealed its new mining hardware, boasting a hash rate of 100 terahashes per second (TH/s). This product unveiling demonstrates that competition is heating up among major ASIC manufacturers, following Bitmain’s pre-sale of its S19 Antiminers.
MicroBT’s forthcoming M30 series of Bitcoin miners, the MS30S++ and the MS30S+, were revealed to 4,000 attendees of an online launch event on April 17.
The company says that its flagship unit (the ++ model, of course) is capable of 112 TH/s at a power efficiency of 31 joules per terahash (J/TH). The M30S+ reportedly clocks in at 100TH/s with 34 J/TH of efficiency. These miners will expectedly sell for $3,900 and $2,800, respectively.
They come with a 12-month warranty, as opposed to the 180-day coverage previously offered by MicroBT.
While the company estimates the hardware will ship throughout the month of June, supply chain disruptions as a result of COVID-19 have left many in the crypto community expecting delays.
Rising Competition Between MicroBT And Bitmain
Bitmain revealed its post-halvlng S19 ASIC series at the end of February, with its first round of units selling out within 24 hours of going on sale.
The Antminer S19 Pro boasts a hash rate of 110 TH/s at an energy of efficiency of 29.5 J/TH, while the standard S19 generates 95 TH/s at 34.5 J/TH. These units are priced respectively at $2,633 and $1,964 each, but shipping has been delayed from May until June.
MicroBT was founded in 2017 by CEO Yang Zuoixing, a former Bitmain employee who claimed to have acted as the lead director behind the Bitmain Antminer series, including its popular S7 and S9 series’.
By 2018, the company had sold approximately 90,000 M1 and M3 units, estimated to represent 7.2% of the total BTC hashrate at the time. Over the next 12 months, the firm would sell a further 300,000 M3 units, bringing its share of hash rate up to 9%.
MicroBT launched its M20 series in May 2019, selling 600,000 units and accounting for 35% of hashing power by the end of the year.
Bitcoin Mining Chip Producer Ebang Files for $100 Million IPO in US
Major mining chip manufacturer Ebang has filed for an IPO in the United States.
Major Bitcoin (BTC) miner manufacturer Ebang has filed for a $100 million initial public offering (IPO) with the United States Securities and Exchange Commission (SEC).
Ebang is seeking to distribute Class A ordinary shares at a face value $of 0.00013 per share. The firm plans to list on either Nasdaq Global Market or the New York Stock Exchange under the ticker EBON.
The move comes nearly two years after the company sought to conduct a $1 billion IPO in Hong Kong. After submitting its filing in June 2018, the offering had been halted by the end of the year.
Ebang Faces A Downturn In 2019
In 2019, 82% of Ebang’s revenues came from its application-specific integrated circuit (ASIC) chips and fabless integrated circuits for miners.
Ebang’s annual revenue was $109 million last year. Declining demand for mining hardware amid falling crypto prices resulted in a 66% drop in growth from $319 million in 2018.
Gross profits swung from $24.4 million in 2018 to $30.6 million in gross losses during last year Ebang’s chip sales fell from 415,930 at an average price of $737 to 289,953 chips for $304 on average.
Mining Hardware Demand Directly Correlates With Bitcoin Price Swings
Ebang’s filing asserts that demand for its products is directly tied to fluctuations in the price of Bitcoin:
Market demands and unit price of Bitcoin mining machines correlate with the economic returns of Bitcoin mining machines and are primarily affected by the Bitcoin price. A rise in the Bitcoin price will generally increase the market demand for Bitcoin mining machines, which in turn will allow us to price our products higher, and vice versa.
“The decrease in the Bitcoin price in 2018 and the first quarter of 2019 resulted in a material decrease in our sales volume and in the average selling price of our Bitcoin mining machines,” said Ebang, adding:
Although the Bitcoin price started to recover in the second quarter of 2019, our operations generally lag behind the increase of Bitcoin price.
Ebang Explores Altcoin Mining Chips
The filing states that Ebang has completed the design for its proprietary 8 nanometer (nm) and 7 nm ASC chips, adding that it is ready to mass-produce the 8 nm units “when the market conditions become suitable.”
Ebang is also working on the development of “proprietary 5 nm ASIC chips and mining machines” for altcoins, including Litecoin (LTC) and Monero (XMR).
The company states that it intends to begin “applying blockchain technology into non-cryptocurrency industries, such as the financial services and healthcare industries.”
Canaan IPO Falls Short Of Expectations
In November 2019, mining manufacturer Canaan Creative raised $90 million in an IPO — less than one-quarter of its $400 million target.
Since launching on Nasdaq for $9 per share, Canaan’s stock price has fallen over 50% to trade for $4.23.
Chinese Officials Support Renewable Energy-Powered Cryptocurrency Mining
Chinese officials from the Yaan municipality released a statement on the use of the local hydropower-derived electricity for cryptocurrency mining operations.
Chinese officials from the city of Ya’an in Sichuan have come out in support of using locally produced hydropower for cryptocurrency mining operations.
On April 20 the Municipal Economic and Information Bureau and the Municipal Development and Reform Commission of Ya’an announced an opinion statement on local crypto mining implementation. The document encourages the consumption of hydropower-generated electricity for mining operations.
The document stated that the municipality will build a “hydropower consumption demonstration zone” and “big data industry gathering area.” Officials believe the province will thus attract investment and development in blockchain companies.
Cryptocurrency Mining In China
China is known to be a major player in the cryptocurrency mining industry. According to a report released at the end of 2019, Chinese Bitcoin miners were at the time responsible for as much as 66% of the global hash rate, with 54% coming from the province of Sichuan.
Still — after the coronavirus pandemic struck the country — China recently started losing ground in the cryptocurrency mining space. As Cointelegraph reported earlier this month, Baite — the former top Chinese Bitcoin mining pool — decided to leave the Bitcoin mining business.
Furthermore, aging hardware is also taking its toll on the local mining enterprises, Recently the Chinese publication Securities Daily reported that over 40 mining operations were forced to stop their activity due to the fact that the now-old Antminer S9s Bitcoin mining ASICS were no longer profitable to operate.
Bitmain Earned Over $300 Million In 2020 Despite Rumored Problems
New report suggests that the Chinese crypto mining giant might be getting back on its feet.
Chinese cryptocurrency hardware manufacturer, Bitmain, made over $300 million in profit in the first four months of 2020. This news comes despite the COVID-19 outbreak and recent rumours about in-house problems, a recent report suggests.
Bitmain allegedly earns over $300 million, rewards employees with massive bonuses
According to the industry blog, Wu Said Blockchain, Bitmain announced internally that the company had earned over $300 million so far this year. Further, the mining giant reportedly regained some market share as it opened four new mining facilities and saw the hashrate increase on two of its mining pools.
Notably, the report mentioned that Bitmain’s Artificial Intelligence, or AI, business has also grown rapidly. The company entered the sector in 2018, planning to use its ready-made chip designs to power AI systems and software.
After a January report suggesting massive staff layoffs, the firm is now said to be rewarding its employees with individual bonuses of up to 70,000 yuan (about $9,900) on the Labor Day, which is scheduled for May 1. The bonus payments will amount to “millions of yuan”, as per the report.
New Report Contradicts Previous Rumours And Legal Problems
The new report might come as a surprise, given that Bitmain is considered one of the biggest victims of the “crypto winter”, and the upcoming Bitcoin halving is also expected to hinder mining profits. Along with the above mentioned job cuts, Bitmain experienced a noticeable market share decline in the second half of 2019.
The pandemic has also reportedly undermined the mining industry in China, although a Bitmain representative has previously told Cointelegraph that it prompted the company to explore alternate methods of working.
More recent problems for Bitmain include reports suggesting that its mining rig, Bitmain S17/T17 Antminer, has a high failure rate. There is also a well documented legal fight between two of its co-founders, Jihan Wu and Micree Ketuan Zhan. In October 2019, Wu ousted Zhan, who was Bitmain’s partner and chairman at the time, from the company. Additionally, Wu warned employees to cease any interaction with the ex-senior executive, threatening to fire those who disobey.
Since then, Zhan has filed two complaints against Bitmain and its AI subsidiary, Fujian Zhanhua Intelligence Technologies, attempting to regain his position as a shareholder. Bitmain believes that Zhan’s claims are baseless, and reassures that the results of the case will not have any impact on the company’s operation.
Cointelegraph has reached out to Bitmain for further comment, but has yet to hear back from the company. This story will be updated, should we receive a response.
Older Mining Machines Turn Profitable Again As Bitcoin Rises Ahead Of Halving
With bitcoin’s price jumping to a two-month high above $9,000, even mining equipment thought obsolete is becoming profitable again, at least for a short time.
According to the miner profitability index, tracked by mining pools PoolIn and F2Pool, older mining rigs, such as Bitmain’s AntMiner S9 or Canaan’s Avalon A851, can now generate a 10% to 20% gross margin at an average electricity cost of $0.05 per kilowatt-hour (kWh).
For those that have adopted miner efficiency improvement methods, such as merging two S9s into one or lowering voltage to boost efficiency, gross margin could increase to as much as 30% to 40% at bitcoin’s current price.
And as CoinDesk reported earlier this week, the upcoming rainy season in China – which is estimated to account for 70% of bitcoin’s total mining power – brings excessive hydropower that will result in electricity costs going under 3 cents per kWh.
Should bitcoin’s price and mining difficulty remain constant, older generation mining models like the S9s could remain marginally profitable at these utility rates even after the halving takes the daily number of newly mined bitcoin down from 1,800 to 900 units.
Meanwhile, major manufacturers’ flagship machines including Bitmain’s AntMiner S17 and S19 series as well as MicroBT’s WhatsMiner M20 and M30 series can bring returns of over 60%, even at an average 5 cents per kWh utility cost.
“Today’s price movement would bring back even those miners that were recently disconnected due to profitability concerns,” said Dmitrii Ushakov, chief commercial officer of Russia-based miner hosting firm BitRiver. “After halving, we believe that the price range of 3 to 4 cents [USD] is sufficient to continue mining profitably with S9 miners if the current price movement continues.”
Following bitcoin’s price crash on March 12, its worst sell-off in seven years, a wide range of older mining rigs have been forced to unplug from the network, resulting in a 16% mining competition drop in late March.
The mining competition drop, together with bitcoin’s price rebound after March 12, initially helped older miners become marginally profitable. As a result, Bitcoin’s total hash rate climbed to a near all-time-high of 110 exahashes per second (EH/s) over the past several weeks.
But during the same period, bitcoin’s price stagnated around $7,000 for weeks, which put pressure on farms relying on older models ahead of the halving and cooled the purchasing spree for more powerful and top-of-the-line equipment at large scales.
That said, bitcoin mining is a dynamically changing game. As bitcoin’s halving approaches in under two weeks, those relying on older mining equipment, without access to cheap electricity resources, face being squeezed out by those running efficient operations.
Mining farm operators previously estimated that older models like the S9 accounted for around 20% of the bitcoin network’s total computing power in March, which is a significant drop from a year ago because major players have been replacing these older models with more powerful new equipment during late 2019.
Iranian Authorizes Issue License For 6000-Rig Crypto Farm
Iran’s Ministry of Industry, Mining and Trade issued a license to Turkey-based company iMiner for operating in the province of Semnan.
Iran’s Ministry of Industry, Mine and Trade granted a license for cryptocurrency mining company iMiner to operate in the country. With 6,000 rigs, iMiner’s setup would purportedly make it one of the largest crypto miners in Iran.
According to an article published on April 29, the Turkey-based company has invested nearly $7.3 million into a Bitcoin (BTC) mining farm in the Semnan Province of Iran, where it will mine digital currency with 6,000 rigs capable of 96,000 terahashes per second (TH/s) in total. This equates to 16 TH/s per rig on average, the same as the Aladdin Miner listed on the company’s website.
In addition, iMiner will continue to offer trading and custody services for the Middle Eastern nation through Semnan and their offices in Tehran.
Crypto Mining In The Iranian Economy
The Iranian government authorized cryptocurrency mining as an industrial activity in July 2019, and has since issued over 1,000 licenses to crypto mining companies including iMiner. The country’s low energy prices make it appealing for miners, who are well known for having high electricity bills.
Iran’s economy is suffering both from the continuing pandemic the sanctions enforced by the United States and other western countries. Some military officials have suggested turning to digital currency to help facilitate trade while importing foreign currency and skirting such sanctions.
However, the push for innovative technology has led to smuggling unregistered crypto mining equipment. As Cointelegraph reported in November 2019, Iranian authorities even offered a bounty for those willing to expose unauthorized mining operations.
Bitmain Produced Bad Batch of Units Ahead of Bitcoin Halving, Miners Claim
Chinese mining hardware giant Bitmain released a batch of Antminer products with a particularly high failure rate, according to a group of miners.
The Telegram group, started by Arseniy Grusha on May 1, co-founder of United States-based cryptocurrency consulting and mining firm Wattum, contains several complaints about Bitmain products, primarily the Antminer S17+. “I have never seen such defective production before,” Grusha wrote on his LinkedIn page on May 4. “In case you have a similar problem, I have created a telegram group where you can share your experience with the latest deliveries of these miners.”
30% Failure Rate Reported
In an interview with Cointelegraph, the mining entrepreneur explained that his company received 420 Antminer S17+ devices in March after a month-long delay caused by the COVID-19 pandemic. According to him, around 30% of the machines started glitching after only one month of use. Normally, defective miners account for just 5-7% of the whole order, Grusha noted.
Among the units, 32 stopped working due to ‘ERROR_SOC_INIT’ error, while 99 now only work using just one or two hashboards out of three, with 80% of the latter group ostensibly having this problem straight out of the box, according to Grusha.
“Part of the miners just stopped working,” he said, clarifying that all of the purchased miners have been using the latest official software from Bitmain. “The other part have bad hashboards and their power is lower by 30 and 60%.”
The Wattum exec has already contacted Bitmain, who apparently appointed him a specialist and new firmware. “Will have results in couple days,” Grusha told Cointelegraph, adding:
“But we still have 32% of bad units. They should be sent to China, and as a result, we lost money on mining before [the] halving and will [have to] wait two months for repair, which of course does no good for us.”
When Asked Whether He Was Considering Going To Court, Grusha Replied:
“I sent a request for compensation, and asked to send new miners instead of the bad miners. Let’s see what they answer first.”
Others in the group, which boasts almost 140 members after being created on May 1, reported somewhat similar failure rates. Mike Hamilton, chief technology officer at New York-based energy startup Griid, shared his experience after receiving a large batch of Antminer S17 50T units:
“We’ve got about 700/1800 machines with at least 1 hashboard down after 3 months. About 300/1800 with at least 2 hashboards down, and probably 150/1800 with all 3 hashboards and/or PSU failures.”
Matt D’Souza, CEO at Blockware Mining, recalled having a 19% defective rate after deploying a thousand Antminer S17+ units in a hosting facility based on freight containers. He got a much lower defective rate of 2% after launching another 1250 of the same model miners at a different facility.
Earlier in April, Samson Mow, Chief Strategy Officer of blockchain infrastructure firm Blockstream tweeted that Bitmain customers have a 20-30% failure rate with Antminer S17/T17 units. Mow also speculated that Bitmain CEO Jihan Wu blames ousted co-founder Jihan Wu for the problems and “is begging customers to give the S19 a chance.”
As previously reported by Cointelegraph, Antminer S19 were designed to produce increased mining output after the Bitcoin halving, which will make it more difficult to mine new coins. Bitmain sold out its first round of domestic Antminer S19 sales within 24 hours, while the units would not be shipped until May 11 at the earliest, which is roughly the same day the halving occurs.
Ukraine Considers Using Nuclear Plants For Cryptocurrency Mining
Ukraine’s Ministry of Energy believes that using power plants for crypto mining could be one of the best ways to take advantage of a current energy glut.
Cryptocurrency mining is a contemporary and efficient way to use excess energy, Ukraine’s Ministry of Energy argued in a May 6 statement published on Facebook. According to the post, local nuclear plants have generated the surplus due to the COVID-19 lockdown.
The Course Toward Digitalization
The bureau is now looking to apply progressive solutions to avoid wasting energy as part of the government’s course toward digitalization championed by president Volodymyr Zelensky. Leaving the situation unchanged might create “conditions for corruption offenses, which will ultimately be paid at Ukrainian citizens’ expense”, the ministry warns.
Crypto Mining, In Turn, Could Prove To Be One Of The Efficient Solutions, The Post Continues:
“There is a way to transfer this ‘liability’ into an ‘asset’. One of the modern approaches for using excess electricity is to devote it to cryptocurrency mining. That would not only allow to maintain the guaranteed load on the nuclear power plants, but also ensure that companies can attract extra funds. Therefore, it would open the way to a fundamentally new economy, new approaches, a new market model.”
As previously reported by a Russian-language crypto news outlet Forklog on May 5, the acting head of Ukraine’s Ministry of Energy requested the state-owned enterprise Energoatom to study potential ways to implement cryptocurrency mining at the country’s nuclear energy generating facilities by May 8.
A Potentially Profitable Operation?
Power plants have been used for cryptocurrency mining before, although not on a government scale.
As reported by Cointelegraph in March, a privately-owned power plant in New York’s Finger Lakes region turned to Bitcoin (BTC) mining, adding about $50,000 worth of BTC each day to daily revenues.
Crypto Mining Giant Bitmain Confirms Problems With Antminer S17 Units
After several customer complaints aired on social media, Chinese mining giant Bitmain confirms that some of its Antminer S17 units have issues.
Chinese mining hardware company Bitmain has admitted to having issues with some of Antminer S17 units.
“Antminer is paying close attention to the issues of some products from the 17 series, which has recently been mentioned by the media,” a Bitmain spokesperson told Cointelegraph on May 6, adding:
“During this process, we have begun to negotiate solutions with customers who have encountered issues from the product. Antminer has always been adhering to the concept of placing customers first. If any customer has any product issues, please contact the official customer service of Antminer at any time.”
As recently reported by Cointelegraph, a mining entrepreneur started a Telegram group earlier this month after supposedly receiving a “bad batch” of Antminer S17+ devices, with around 30% of the ordered machines glitching or breaking down after only one month of use. The group, which now has over 160 members, contains several complaints of a similar nature.
Identical concerns were previously articulated by Samson Mow, chief strategy officer of blockchain infrastructure firm Blockstream. Mow tweeted last month that Bitmain customers have a 20–30% failure rate with Antminer S17/T17 units.
More Antminer Units To Be Shipped Out Soon
With the Bitcoin halving taking place in one week, Bitmain has recently sold out its first round of domestic Antminer S19 sales, although the units will not be shipped until May 11 at the earliest. The new product was designed to produce increased mining output in post-halving conditions.
US Mining Firm Plans To Nearly Double Hash Rate After Halving
Riot Blockchain has announced the purchase of an additional equipment for its post-halving operations.
U.S.-based mining firm, Riot Blockchain, has more than doubled the number of next-generation Bitcoin (BTC) miners it has purchased, buying 1,040 Antminer S19s from Bitmain on May 6.
The additional miners cost the firm $1.9 million, following Riot’s purchase of 1,000 S19s Pros, revealed on April 30.
Riot Predicts 80% Increase In Hash Rate After Deploying S19s
Anticipating that the units will have been shipped and deployed during the third quarter of this year, Riot expects the coming 2,040 S19s will increase its operational hashrate by 80% by 2021.
In total, the Riot predicts that it will command an operating hashrate of 457 petahashes per second while utilizing approximately 16.5 megawatts of electricity after deployment.
A spokesperson representing Bitmain in North American stated that the firm “has been working with Riot Blockchain for several years,” with Riot “using [Bitmain’s] Antminer products for operating their data centers.”
S17 Failures Cast A Dark Cloud Over S19 Launch
Riot’s near-multi-million dollar purchase from Bitmain came on the same day that the ASIC manufacturer acknowledged having problems with a recently shipped batch of S17s — with miners reporting failure rates as high as 30% among the units.
The company told Cointelegraph that it is currently in negotiating solutions with customers who have purchased defective units, encouraging affected users to contact it directly.
Riot Partially Relocated Due To Pandemic
After reporting that the COVID-19 outbreak had impacted the business activities at its facility in Oklahoma, Riot Blockchain relocated a portion of its recently purchased S17 miners to a facility operated by mining firm, Coinmint, in New York during April.
Last week, a New Jersey judge granted seven motions of dismissal ending a two-year lawsuit against Riot Blockchain alleging that the firm misled its shareholders at the start of 2018.
Binance’s Mining Pool Could Disrupt The Entire Mining Industry
Binance’s entrance to the Bitcoin mining industry could create a great disparity for the Bitcoin community.
Binance has launched its own mining pool. This could spell bad news for miners, but probably not for the reason you’re thinking of. We’re all aware that Binance is continuing to extend its reach across the industry. The exchange’s purchase of CoinMarketCap for a reported $400 million signaled a bold step toward grabbing attention at the top of the crypto funnel, and its recent foray into mining just ahead of the 2020 halving shows that Binance is also interested in having influence at the source.
By all accounts, the company culture at Binance appears to be one of innovation and experimentation. CEO Changpeng Zhao is known to be approachable, and when good ideas come from within the company, it is able to exercise its enormous user base and war chest to enter new markets.
The question is, what impact will Binance’s pool have on miners themselves?
To start with, the impact may be minimal. Binance’s initial target market will be miners who currently mine via the pools of other Chinese exchanges, such as Huobi and OKEx. There is fierce competition among those exchanges, and Binance launching a pool can be viewed through this lens. Binance even recruited directly from within Huobi as well as Bitmain to build its own pool’s business development team.
It’s still early days, but the change in global hashrate distribution since Binance launched their pool tells the same story. Both Huobi and OKEx have lost a couple of percentage points of share in global hashrate. OKExPool and Huobi fell from 6.74% and 5.92%, respectively in April 2020 to 4.5% and 4.0% at the start of May, while Binance has attracted 4.5% of the network’s hashrate since launch.
Meanwhile, established mining pools such as F2Pool and SlushPool have seen a growth in their share of hashrate during the same period.
Up until now, Huobi and OKEx have predominantly used their pools as a way to attract exchange customers and support the services already on offer. While the older pools compete in a different way.
Exchanges have massive reserves of Bitcoin and other liquid assets. They can operate at a loss, or close to cost, for extended periods of time.
Edward Evenson from SlushPool and Ethan Vera from Luxor recently discussed this short-term advantage on the mining pool-focused HASHR8 Podcast. They posited that Binance’s pool will be used as a loss leader because it can afford to drive prices into the ground. As Edward Evenson, director of business development at SlushPool, said:
“When you have 80,000 BTC on reserve, it becomes pretty easy to do whatever you want, especially when you’re vertically integrated across a bunch of different sectors of the industry.”
Another reason why Binance may be focused on the Chinese mining market is that the majority of their team, their base and their connections are still mostly in China. It also makes good business sense: 65% to 70% of the global hashrate is in China.
My concerns about this are not the typical narratives of over-centralization in China, as were recently expressed by Philip Salter from Genesis Mining. Indeed, as with the lessons everybody can learn from how Genesis handled their customers’ hashrate during the 2018 bear market, it’s much more important to focus on how you treat miners than where your company is based.
I’m of an opinion similar to my Australian colleague, Thomas Heller — global business director at F2Pool — who was also part of the debate on the HASHR8 Podcast. He underlined:
“The people who launched Bitcoin companies in Asia, such as pools or manufacturers, are Bitcoiners. They’re no different to Bitcoiners in Europe, North America or elsewhere.”
Bitcoin Mining And The Real Threat
Centralization is not a direct function of geographic location. Bitcoin doesn’t have a nationality, and pools don’t need to be labeled that way, either. As well as the increased development of farms in North America, large mining operators own and run machines in China, Russia, Kazakhstan and anywhere else with an abundance of low-cost energy — regardless of where the operators call home.
The fundamental risks in China are outside the control of Bitcoiners, and it makes sense for everyone who wants to profit from contributing to the security of Bitcoin try to find ways to not be dependent on single points of failure.
Economic factors such as the proliferation of hardware manufacturers and the logistical benefits of mining without having to export the machines halfway around the world will continue to support a disproportionate level of mining activity in that region.
Bitcoin mining is a permissionless, antifragile system where the barriers to entry are low-cost electricity and access to efficient hardware.
The future success of SBI’s focus on supplying hardware for large North American mining operations, or the potential entrance of even more well-equipped manufacturers like Samsung could change the mining landscape reasonably quickly. As low as electricity prices are in China now due to the lasting wet season, not even they can compete with some of the opportunities being explored by the likes of the Peter Theil-backed Texan’s Layer One or Greenidge Generation in New York.
So the threat that Binance poses is not geographic. The real threat is whether this crypto behemoth will drag down the circular economy that currently exists for the established pools.
SlushPool is the oldest pool, and it spends a large portion of its resources developing proposals such as Stratum V2. F2Pool had a loud voice in the SegWit 2x debates, and history suggests its founders came down on the right side of the argument. These kinds of pools make their profits by building up a reputation and experience in mining Bitcoin.
The real risk is Binance turning mining into a short-term game where the only rules are how low you can offer fees. What will be the consequence if pools focusing on the long-term success of their miners get squeezed out? As with everything within the beautiful game that Satoshi created: The market will decide.
Unprofitable Miners Already Leaving Bitcoin Network Ahead of BTC Halving
The halving is just a few hours away — and many miners are already shutting their soon-to-be unprofitable rigs, says Poolin VP Alejandro De La Torre.
With the halving scheduled to happen in just under four hours, unprofitable miners have already begun shutting down their equipment, vice president at major mining pool Poolin Alejandro De La Torre said in a May 11 interview with Cointelegraph. Per his estimations, these miners account for “15-30%” of the entire Bitcoin (BTC) hash rate.
“Mining farm personnel are shutting [their units] off as we speak since they will not want to do it after the halving — because then they’re losing money,” De La Torre told Cointelegraph.
The miners who are now fleeing will likely never come back online if they don’t upgrade their equipment or find extremely cheap electricity sources, because the mining reward will be halved once the event occurs:
“All older machines will no longer be profitable unless they are mining on nearly free electricity or if the price shoots up by 2x or more.”
According to De La Torre, unprofitable mining operations based in China will be the first to switch off. The halving will take place at early morning local time, which is why Chinese operators are now shutting down profitless units before punching the clock.
Hash Rate To Decrease Post-Halving, Bouncing Back Afterward?
This shutdown will affect the total hash rate, De La Torre added, since the soon-to-be unprofitable units generate “about 15-30%” of that number.
As previously reported by Cointelegraph, Bitcoin’s mining hash rate has seen major volatility ahead of the halving, and is likely to fall soon after it takes place — but could then start to bounce back as the new generation of mining machines gets shipped out.
New Cryptic Chinese Operation Instantly Becomes Sixth-Largest BTC Mining Pool
A new Chinese mining pool swiftly takes 5% of the Bitcoin mining pie, while its origins remain unknown.
New China-based mining pool Lubian accounts for 5.15% of the total Bitcoin (BTC) hash rate, just three weeks after processing its first block. The pool was originally spotted by BlockBeats, a Chinese blockchain news outlet, on May 12.
Lubian is currently the sixth-largest mining pool, with a 6.30 EH/s hash rate, data obtained from btc.com shows. The operation first surfaced on April 24, when it found block #627,441.
According to Dovey Wan, Primitive Ventures’ founding partner and industry commentator, Lubian could be an ex-private pool that has recently gone public. She tweeted:
“It must be a private pool before now reveals itself to be public as hashrate didn’t see a pop.”
Wan also noted that Lubian is picking up pace at an “interesting time,” since the Bitcoin halving happened yesterday. “Whoever owns the pool, must have owns the bootstrapping hashrate to start with as other pools didn’t see a major drop off,” she wrote.
Mining Industry Expects Major Changes
The mining sector is poised for major changes due to the Bitcoin halving, which has cut miner rewards from 12.5 BTC to 6.25 BTC.
Most miners operating older equipment are expected to leave the network, which in turn could lead to a 30% drop in the total hash rate. However, a new generation of mining devices, which will be shipped starting mid-May, could potentially drive the metric back to its previous levels and above.
Earlier in April, Chinese mining company Valarhash, which runs Bytepool and 1THash pools, suddenly dropped out of the BTC mining race in favor of altcoins.
Cointelegraph reached out to Lubian for additional details, but received no response as of press time.
4 Reasons The Bitcoin Halving Won’t Trigger A Big ‘Miner Capitulation’
Bitcoin miners are not likely to see capitulation and especially a “mining death spiral” after the 2020 halving due to four major reasons.
A popular narrative revolving around the Bitcoin (BTC) halving is that it may trigger the capitulation of miners. But, it is premature to suggest many miners will shut down in 2020 and bring the price of cryptocurrencies down as a result.
Some industry executives believe that the price of Bitcoin may drop following the May 11 halving. After the block rewards of Bitcoin miners get cut in half, their revenues also drop substantially. Typically, it affects overleveraged and small miners, forcing them to shut down their machines.
Digital Asset Manager Charles Edwards Said:
“This will be the most brutal Bitcoin Halving in history. Production cost is about to double to $14,000. 70% above the current price. During the last halving, the price was just 10% below Production cost, and Price & HR collapsed -20%. Without FOMO now, expect a big miner capitulation. 30%+”
A widespread theory is that as miners capitulate, they will begin to sell Bitcoin in the cryptocurrency exchange market and add significant selling pressure, which leads to more miners leaving and so on, resulting in the mythical “mining death spiral.”
This year, there are many variables that may prevent such a trend from occurring. Four main arguments against the capitulation of miners are: cheaper electricity in China decreased operational expenses due to weaker currencies, drop in energy price due to government lockdowns worldwide, and the adjustment of mining difficulty.
Cheaper Electricity In China & Less Demand For Energy Worldwide
China reportedly comprises roughly 65% of all Bitcoin computing power, according to the latest data.
Moreover, the Chinese province of Sichuan is soon to enter the rainy season. Many electricity service providers in the province rely on hydropower to generate energy. When there is an abundance of water, it allows hydro plants to generate more energy than usual.
The increase in the supply of electricity in Sichuan gives large-scale mining centers in the region the ability to negotiate electricity prices. For the next few months, big miners are likely to receive major discounted electricity rates, decreasing operational costs.
Worldwide implementation of stay-at-home measures and strict lockdowns further decrease the level of electricity usage. Major factories and millions of small businesses remained closed for around two months.
Low electricity rates, record low global oil prices and the tendency of industry-leading mining firms to maintain a large cash buffer tremendously reduce the risk of miner capitulation.
Weaker Currencies Result In Lower Operational Costs
According to Whit Gibbs, CEO at Hashr8, the decline of the ruble’s value may affect mining centers based in Russia.
The entire revenue of mining firms derives in the form of Bitcoin. But operational costs are often paid out in local national currencies. When the price of Bitcoin increases but the value of fiat currencies decline, it drops the expenses for mining firms as local fiat currencies lose value against BTC.
The geopolitical risks in the global economy and their possible impact on Bitcoin mining are not being accounted for. Hence, to state that miners are likely to capitulate in the latter half of 2020 can be premature.
This halving COULD be the most brutal in history but it’s all just a best guess. There hasn’t been a comprehensive report in the last week to talk about current geopolitical and economic conditions, and how they’ll impact mining/ the price of bitcoin.
Bitcoin Mining Difficulty Adjustment
When the number of miners mining Bitcoin declines as a result of low price and fewer block rewards after the halving, the difficulty of mining BTC automatically adjusts to maintain a steady block interval.
The term “mining” refers to the creation of new Bitcoins as a reward for contributing computing resources to the network. The network automatically adjusts how difficult it is to mine BTC every 2,016 blocks if the computing power, also known as the hash rate, drops (or rises).
The mining difficulty adjustment mechanism stops a cascade of miner capitulation from occurring, as it will get cheaper to mine BTC when the hash rate drops.
Bitcoin Miner Riot Blockchain Racks Up $221 Million Deficit
Despite increasing revenue, Riot Blockchain’s first-quarter financials reveal that the company has relied on equity and debt financing to fund its operations.
U.S. mining firm Riot Blockchain has published its financial report for Q1 2020 — painting a picture of a company heavily reliant on equity and debt financing to fund its operations.
The firm reported recurring losses and negative cash flows from its operations, with Riot anticipating continued losses over the near term.
But the mining outfit is pinning its hopes on the arrival of 2000 next generation mining machines it believes will enable it to double its operational hash rate.
Riot Improves Year-Over-Year Performance
As of March 31, 2020, Riot Blockchain reported holding cash and cash equivalents worth $14 million; $5.3 million in crypto assets — predominantly Bitcoin (BTC) — along with working capital of $17 million.
In a press release, Riot emphasizes its improved performance when compared with the first quarter of 2019 — with its margin on mining operations up to $955,000 from a loss of $65,000. Revenue increased 68%, from $1.4 million to $2.4 million, when compared to Q1 2019.
The firm also emphasizes a sharp increase in corporate liquidity since the start of the year, with liquidity up to $19.2 compared to $11.3 million as of December 31, 2019.
Yeah, But About That $221 Million …
However, Riot’s accumulated deficit exceeded $221 million, with the company relying on equity and debt financing to fund most of its operations.
Further, the company “expects to continue to incur losses from operations for the near-term,” noting that the losses may be significant as legal and administrative costs, and expenditures associated with acquisitions, continue to mount. “The company is closely monitoring its balances, cash needs, and expense levels,” the report stated.
Riot Bets Big On Next-Generation Antminers
The firm notes that its Q1 gains in revenue and gross profit can be primarily attributed to changes in cryptocurrency prices and its recent deployment of next-generation cryptocurrency miners.
In December, Riot purchased 4,000 Antminer S17 Pro ASICs from Bitmain for roughly $6.3 million. While all of the units were deployed by the end of February, disruptions stemming from COVID-19 saw the firm relocate a significant portion of its S17s to a facility in New York operated by Coinmint in April.
Riot has recently purchased 1,000 Antminer S19s and 1,040 S19 Pros Bitmain, expressing expectations that their deployment will double its operational hash rate.
However, with debts exceeding $220 million, it remains to be seen whether the S19s will be able to significantly improve the company’s performance, especially after this week’s halving saw the block reward reduced to just 6.25 BTC.
Hackers Are Using Supercomputers To Mine Crypto
Hackers attacking supercomputers across Europe, trying to get their hands on mining crypto.
Hackers have attacked multiple supercomputers across Europe this week with the intention of mining cryptocurrency. Clusters of supercomputers have been forced to shut down in order to investigate the intrusions, according to a ZDNet news report on May 16.
These security incidents were reported in the UK, Germany, and Switzerland. Additionally, another possible attack occurred in a high-performance computer center in Spain, according to the report.
College Campuses Are The Main Victims
Most of the attacks appear to have targeted universities. University of Edinburgh,which runs the ARCHER supercomputer, reported the first incident on Monday.
Then, major universities’ high-performance computing clusters in the state of Baden-Württemberg, Germany also announced that they were attacked on Monday with similar security incidents, and had to be shut down.
More attacks happened in institutions in other parts of Germany, Spain, and Switzerland later in the week. Clusters in the Leibniz Computing Center, or LRZ, an institute under the Bavarian Academy of Sciences, the Julich Research Center in the town of Julich, Germany, the Faculty of Physics at the Ludwig-Maximilians University in Munich, Germany, and the Swiss Center of Scientific Computations, or CSCS, in Zurich, Switzerland were all counted amongst the victims.
SSH Logins Are Compromised And The Goal Is To Mine Crypto
The malware samples released by the Computer Security Incident Response Team were reviewed by a US-based cyber-security firm, says the news. The Computer Security Incident Response Team, or CSIRT, is a pan-European organization that coordinates research on supercomputers across Europe.
The cyber-security company said the attackers appear to have stolen university members’ SSH credentials in Canada, China, and Poland in order to gain access to the supercomputer clusters. Secure Shell, or SSH, is a cryptographic network protocol for operating network services securely over an unsecured network.
Chris Doman, Co-Founder Of Cado Security Explained That:
“Once attackers gained access to a supercomputing node, they appear to have used an exploit for the CVE-2019-15666 vulnerability to gain root access and then deployed an application that mined the Monero (XMR) cryptocurrency.”
As Cointelegraph reported previously, university campuses were ranked the second biggest miners of digital currency across industry.
Critical Mining Hardware Manufacturer To Launch Second US Factory
Major mining hardware manufacturer TSMC has announced plans to build a $12 million facility in Arizona.
The world’s largest semiconductor manufacturer and third-largest chip manufacturer, Taiwan Semiconductor Manufacturing Co., or TSMC, has announced plans to build a $12 million factory in Arizona.
The move comes after TSMC suffered significant disruptions across its supply chain amid the coronavirus outbreak in China.
With Bitmain relying on TSMC for its next-generation chips and wafers, disruptions to TSMC specifically have been cited among the reasons for delays in shipping for its new Antminer S19 ASICs.
TSMC To Open Arizona Factory
The factory’s construction is slated to commence next year, with TSMC hoping the facility will begin producing 5-nanometer transistors in 2024.
Roughly 1,600 jobs are expected to be created through the factory’s creation, with TSMC expecting to invest $12 million into the facility between 2021 and 2029.
TSMC currently operates a factory in Washington and design centers in California and Texas.
Trump Administration Frames Factory As Security Victory
TSMC’s decision to launch the Arizona facility has been welcomed by the Trump administration — described the United State’s reliance on Asian semiconductor and chip manufacturers as a national security risk for several years.
U.S. Secretary of State Mike Pompeo applauded the news, tweeting: “The U.S. welcomes TSMC’s intention to invest $12B in the most advanced 5-nanometer semiconductor fabrication foundry in the world.”
“This deal bolsters U.S. national security at a time when China is trying to dominate cutting-edge tech and control critical industries,” Pompeo added.
Miner Revenues Crash, But This Has Always Marked Bitcoin Price Bottoms
The drop-off in Bitcoin mining revenue to 2019 levels show a macro bottom for BTC is near as the impact of the halving is starting to be felt.
The revenue of Bitcoin (BTC) miners dropped to early 2019 levels for the second time in 2020. Every time it declined to a multi-year low, it marked the start of a bullish trend for BTC.
The last time the daily revenue of Bitcoin miners hovered at around $7 million was on March 13, 2020. At the time, the price of BTC dropped to as low as $3,600 on BitMEX following a cascade of more than a billion dollars in long contracts.
After mining revenue plunged on March 13, the price of Bitcoin rose from $3,600 to over $10,000 with a 177% gain over the next month and a half.
Bitcoin May See A Similar Trend In The Coming Months
When Bitcoin mining revenue falls steeply, it indicates that over-leveraged miners are capitulating due to unfavorable market conditions.
From March 12 to March 13, the mining revenue declined as a result of a 50% drop in the price of Bitcoin in a span of 24 hours. This time, the drop-off is seemingly caused by the effect of the Bitcoin halving on the mining ecosystem.
Before the halving, miners were generating about 1,800 BTC per day in revenue. Today, miners are expected to make around 900 BTC per day.
But the price of Bitcoin is currently at a similar level as where it was before the halving was activated. For small or over-leveraged miners, the stagnancy in the price of Bitcoin following the halving is enough to cause a temporary halt in their operations.
Typically, this marks a bottom for Bitcoin because it indicates a peak level of fear in the market. Some unprofitable miners are shutting down while BTC is stagnant. Therefore, Bitcoin could see short-term volatility as on-chain data suggests the generational bottom before a new bull cycle is seemingly being established.
Other Macro Indicators Also Flipping Bullish
The Puell Multiple, a macro indicator that uses the daily issuance of BTC to measure the trend of the market, shows that BTC is close to its bottom.
While the Puell Multiple suggests there may be another minor pullback in the short-term, it is showing a 2018-esque trend wherein BTC is gearing towards a bullish trend as seen in early 2019.
From early to mid-2019, the price of Bitcoin rose from $4,000 to $14,000, and various on-chain data suggests BTC is now showing similar signs.
Technical indicators such as the Relative Strength Index (RSI) and the Moving Average Convergence Divergence (MACD) for large time frames also show that BTC is nowhere near the top following a 160% price spike.
Bitazu Capital Founding Partner Mohit Sorout Said:
“Notice how major BTC cycle top & bottoms were printed against the backdrop of peak volatility? Simple look will tell you $10k is a small hiccup.”
The price of BTC nearly tripled since March 13 from $3,600 to $10,085 and yet, historically accurate indicators are not showing a top-like structure for BTC.
Layer1 Stabilizes Texas Grids With ‘Bitcoin Batteries’
Layer1 Technologies has deployed its proprietary mining containers as electricity storage systems to stabilize Texas’ electricity market.
U.S.-based Bitcoin (BTC) mining datacenter operator Layer1 Technologies has deployed its mining containers as “Bitcoin Batteries” comprising large-scale energy storage systems.
Layer1 asserts that its bitcoin batteries will help stabilize Texas’ seasonally volatile energy market by releasing electricity to meet demand.
“By centralizing the consumption and release of multiple megawatts per data center container, Layer1’s Bitcoin Batteries stabilize national and local energy grids that frequently suffer from the demand shacks,” the firm stated.
Bitcoin Batteries To Stabilize Electricity Market
With the installation of the Bitcoin Batteries, Layer1 co-founder and CEO Alexander Liegl claims the mining firm is “the first company in the global Bitcoin mining industry that can curtail large amounts of energy consumption during times of market need and release it to the grid at the push of a button.”
We are the first company to perfectly align the economic incentives of large-scale energy consumption for high-performance computing, such as Bitcoin mining or cloud computing, and the need for grid stabilization by energy market regulators.
The firm plans to deploy energy in response to local spikes in consumer demand, such as during heat waves — where amplified use of air conditioning may threaten blackouts.
Layer1 To Repatriate 30% Of Global Hashpower
In February, Layer1 Technologies outlined an ambitious plan to repatriate 30% of Bitcoin’s total hashrate back to the United States by the end of next year.
Layer1 plans to comprise the industry’s first fully vertically integrated miner — boasting wholly owned electricity creation, proprietary ASIC chips, and mining containers featuring a patent-pending liquid immersion cooling system that reduces electricity expenditure by 75%.
Large Chinese Miners Want To Operate In US
Speaking to Cointelegraph, Adam Traidman, the head of Ripple SBI Asia, attesting to already seeing a “massive” shift from east to west in the mining sector.
Traidman predicted a “huge influx” of “wealthy Chinese miners [moving] into the United States” over the next three years, highlighting that Texas offers electricity prices often significantly lower than the $0.03 to $0.05 per kilowatt-hour that miners pay in China.
However, Traidman noted that President Trump’s tariffs against China are “really hurting things,” adding: “As soon as those are lifted, it’ll be a huge acceleration.”
Bitcoin Miners Will Use Derivatives Like Traditional Commodity Producers
Miners need traditional financial products in order to hedge against the risk of increasing hash rate and difficulty.
Bitcoin (BTC) mining has become a multibillion-dollar industry. Pools, manufacturers and farms contribute to the growth and professionalization of the space. Financial service companies bring institutional-grade products and capital that increases liquidity for the biggest operators.
There’s a fundamental shortage of United States dollars available relative to the overall demand when the sector encounters certain market conditions. The dollar shortage is one of the contributing factors to volatility in the markets.
Just like traditional commodity producers, Bitcoin miners will likely become large users of derivatives — whether it’s with futures to lock in prices or options to hedge against losses. Everybody with a business that has relatively predictable cash flow is going to have an appetite for access to debt in order to reduce the capital requirements necessary to fund their growth.
For Bitcoin miners, it’s no different.
At their core, the Bitcoin lending markets have been supported by the proliferation of crypto derivatives — through BTC/USD swaps and futures — that people are now able to trade with. Derivative trading generates an implied interest rate on BTC, with which miners and other parties can use to borrow BTC against USD, or vice versa.
Finding scalable sources of low-cost capital and educating more institutional players about mining will lead to increased funding opportunities. Expanding access to capital is going to play a role in securing the Bitcoin network. Everything is becoming more sophisticated, and you don’t have to look far to find analogies for what we can expect will happen to this space over time.
The Current State Of Play
The trend of miners opting to borrow fiat to pay expenses without selling their coins has been growing.
Financiers from Genesis Trading and Three Arrows Capital suggested that terms are getting tighter, but demand is increasing.
Su Zhu, The CEO of Three Arrows Capital, Said:
“If firms can get a better understanding of where their yields come from, who and why is borrowing, and how people will pay for it, that will be a good step forward for this industry.”
For firms doing the arbitrage trade, we need a pledge for quality especially when we reflect on the consequences of the most recent price crash, in March 2020.
Recently, many counterparties, particularly in China, were completely wiped out through liquidations. There was a concept of false diversification where the thoughts were: Lending to many different firms doing the same thing is safer than lending to a few larger firms.
Six or seven years ago, on sites like BTCjam, people were simply lending money and hoping that they would get paid back. Fast-forward to today: People are now able to do things like look for different Loan-to-Values, or LTVs, as an arbitrage against the underlying market.
Zhu noted that firms sat back when the market crash occurred, even though it was a very profitable time to lend BTC.
When the market became safe again, they wanted to lend again even though the LTVs became more burdensome and terms got tighter.
Leon Marshall, The Head Of Institutional Sales At Genesis Trading, Said:
“The explosion of derivative markets and basis trading has been a key part of the recent growth in Bitcoin lending. Miners and institutions make up a fair amount of the dollar-borrowing demand at our firm.”
What miners think about the most is interest rates and collateral requirements. One thing that should be more on their radar is to also find trusted and reliable counterparties. Some financial services providers protect themselves by only providing lending to the best clients and highly rated counterparts. This makes it harder to get loans but safer in the long run.
Reputable firms understand the wishes for low rates and low collateral and try to balance that with the need to reduce risk. Every party needs to protect themselves, and the best firms will try to ensure that miners are still alive when prices move lower.
The regulatory requirements and stringent collateral requirements for licensed financial services are a consequence of the fact that those firms deal with the capital of other parties when sending loans to miners and mining pools.
People have started to step back and ask: Okay, what do we actually know about these operators, and what funds do we think they would have available to meet a margin call? It comes down to how the counterparties think about risks and black swan events.
The other factor that will affect liquidity is that banks around the world, and in Europe in particular, have started to become comfortable working with crypto companies. JPMorgan recently announced it will bank Coinbase and Gemini. When banks start accepting Bitcoin as collateral, we will see new sources of capital entering the industry that will have a profound impact on lending rates.
One source of liquidity for the markets, up until now, has been Tether (USDT). The recent growth in the market cap of stablecoins is an indication of the increasing demand for liquidity for crypto assets. The demand for USDT trading is particularly strong in Asia where it makes up 70% of Bitcoin trades. The collapse of Tether would likely lead to a crash in crypto markets.
Yama Zhang, the host of the Crypto Tonight YouTube channel — where several of the leaders from the finance and mining world met in a livestream — reported that there is a big community of USDT users in Asia but that the people who have been in the space for a longer period of time are actually quite concerned about Tether. There is a feeling in the established Bitcoin community that it is a real threat.
Hash Rate Futures
As players get more comfortable with mining futures, more products come onto the market. Earlier this month, FTX announced the launch of its hash rate futures. Its futures are priced by the average difficulty per quarter, meaning that as of May 2020, where the difficulty is roughly 16 trillion, the index is at 16.
Hash rate futures should allow miners to hedge their exposure to difficulty adjustments, letting them reduce their risk while maintaining operations.
Sam Bankman-Fried, The CEO of FTX, Said:
“You could potentially buy hash rate futures to protect against difficulty changes and then sell BTC futures to hedge against market moves.”
Professionalization For Miners
The current trend is for mining operations to scale up and become more professional. For mining pool operators without a deep financial background, it’s unclear for them how to assess the risk of certain financial products, or to even know who would be willing to take the other side of these trades. If the finance industry continues to work with trusted leaders from the mining industry, we will see liquidity increase and risks minimized.
Miners Have Been Selling More Bitcoin Than They Generate, Recent Data Suggests
Last week, Bitcoin miners reportedly sold 11 per cent more coins than they generated over the same period.
Last week, Bitcoin (BTC) miners sold 11 per cent more coins than they generated over the same period, June 1 data from on-chain analysis portal ByteTree suggests.
According to the portal’s metric that tracks Bitcoin wallet addresses associated with miners, around 5,800 BTC was generated over the past seven days, compared to over 6,500 ‘first spend’ transactions.
The ‘first spend’ that is used for the calculation is “the first time that a Bitcoin leaves the wallet it was generated in,” a ByteTree spokesperson explained to Cointelegraph, elaborating on how their metric works in greater detail:
“The miner wallet can be owned by an individual, a company or a mining pool. When the coins get generated by the miners and appear in the miner wallet, they are counted as ‘generation’. Those coins can then sit in their respective miner wallets for days, months, years or forever. It is up to the controller of that miner wallet to decide when they want to move the coins. If these coins are generated by a mining pool, the coins will either be distributed to the pool subscribers (ie. paid in btc) or sent to an exchange at some point in order to cover the fiat costs of operation.”
It Might Be Premature To Call ‘Capitulation’ Even Among Currently Inefficient Miners
Crypto Twitter commentator Conner Brown has used this data to argue that inefficient miners are capitulating, but some experts warn that the term ‘capitulation’ might entail different meanings.
Thomas Heller, global business director at F2Pool, told Cointelegraph that even when it becomes unprofitable to mine with certain equipment due to the increased difficulty, the owners normally sell their machines to places where electricity is cheaper instead of quitting the game.
“As these older machines are no longer profitable to mine at the electricity price in China, Canada, USA, or Europe, they eventually end up in other locations, such as Kazakhstan, Russia, the Middle East and South America,” Heller said, concluding:
“So far in 2020, there have been very few cases of mining farms going out of business”.
As previously reported by Cointelegraph, the Bitcoin halving has affected the network in numerous ways, as the hash rate, block time, fees, and miner revenue have changed considerably as a result of the event.
In order to mitigate the increased difficulty and provide pre-halving levels of mining efficiency, a new generation of mining hardware is being released by industry leaders like Bitmain and MicroBT. Earlier today, Bitmain unveiled its new Antminer T19 Bitcoin Mining ASIC, which will reportedly start getting shipped out in late June.
Bitmain Debuts New T19 Bitcoin Miner After S17’s Troubled Launch
World-leading mining hardware producer Bitmain launched its new Antminer T19 Bitcoin Mining application-specific integrated circuit (ASIC).
According to a June 1 announcement, Bitmain’s new Antminer T19 features a SHA256 hash rate of 84 terahash/second with a 3% error margin and a power efficiency of 37.5 joules/terahash with a 5% error margin.
The new ASIC model will be sold on the producer’s official website starting today and shipments will start between June 21 and 30.
The chips used in the new device are the same as those featured in the Antminer S19 and S19 Pro, but it also uses the new APW12 power supply and an upgraded firmware. Those changes reportedly allow for faster start-up speeds for an optimized mining experience.
Riccardo Mori, the manager of a small scale mining operation in Venezuela, told Cointelegraph that the T19 is a major improvement over the T17 and its introduction will probably increase Bitcoin’s hashrate. He also believes the introduction the new hardware will help Bitcoin’s network gain hashrate once again:
“With the introduction of the T19 we can expect the network hashrate to substantially rise and consequently the mining difficulty to rise as well. This will lower the profitability and extend the expected ROI time once again.”
Bitmain’s Production Pain Points Recently Manifested
The T19 announcement follows recent community reports that Bitmain’s recently-launched Antminer S17+ mining ASICs were defective. Co-founder of United States-based cryptocurrency consulting and mining firm Wattum Arseniy Grusha said:
“I have never seen such defective production before.”
Shortly after the early-May critiques, Bitmain confirmed that many ASIC units of the series had major problems. A spokesperson told Cointelegraph that the company was already in talks with customers who encountered the issues.
Antonopoulos: Drop In Oil Prices Give US Miners A Competitive Edge
Crypto miners based in the United States will greatly benefit from the falling electricity prices worldwide, says Andreas Antonopoulos.
Bitcoin educator Andreas Antonopoulos sees the recent downturn in oil prices as a net positive for crypto miners worldwide, particularly those at the Bitmain mining facility in Texas.
In a video he posted to his YouTube channel on May 27 titled “Down the Rabbit Hole”, Antonopoulos said the falling oil prices will benefit crypto miners by providing cheaper electricity worldwide, but “not equally worldwide.”
Miners based in the United States — which gets 36% of its energy from petroleum — and Texas in particular will reap the rewards of these cheaper costs.
One of the biggest new mining operations opened in the United States in the state of Texas and I can’t imagine that that is a coincidence… it probably had a lot to do with the fact that the U.S. had 12,000 barrels per day. It is the largest oil producer in the world because of fracking. Therefore, there may be really good opportunities for cheap power, which would suddenly make U.S.-based miners much, much more competitive and profitable.
Chinese Miners Also Benefit
China remains a major player in the cryptocurrency mining industry. Cointelegraph has reported Chinese Bitcoin miners were responsible for as much as 66% of the global hash rate in 2019.
Antonopoulos acknowledged that most Chinese crypto mining is completed with rigs primarily powered by coal plants — though some companies are pushing for renewable power.
However, he said that falling oil prices would still result in financial benefits for Chinese miners. According to the Bitcoin educator, energy producers not reliant on petroleum might attempt to stay competitive by operating at a loss, resulting in cheaper electricity for miners while the price of oil is down.
Because energy and electricity is a fungible commodity, if you are connected to a coal-fired power plant and somewhere else, a gas-fired or oil-fired power plant has half the cost of energy because its oil is much cheaper, it’s going to cost less to get electricity from your coal plant…
The real competition between buyers, said Antonopoulos, is no longer determined by having the most modern mining rigs, which he says are generally fine to use for 18-24 months. Rather, it is based on “the unit cost of electricity, which is dominated in some places by the cost of oil.”
US Firm Announces Installation of 700 Mining ASICs With More On The Way
United States firm, Marathon Patent Group, announced that it installed 700 units of Bitcoin (BTC) mining application-specific integrated circuit, or ASIC, units.
According to a June 3 announcement, Marathon Patent Group installed 700 Whatsminer M30S+ ASICs produced by MicroBT. The company is also reportedly waiting for a delivery of 1,160 AntminerS19 Pro units produced by leading mining ASIC producer, BitMain.
In late March, Bitmain announced that it sold the first batch of Antminer S19s and S19 Pros within 24 hours after starting to accept orders. On June 1, the firm also announced the launch of its newest Antminer T19 features a SHA256 hash rate of 84 TH/second.
A Company Rich In Hashrate
The Antminer S19 Pro boasts a hash rate of 110 TH/s and an energy efficiency of 29.5±% 5 J/TH. That means Marathon Patent Group is waiting to add 127.600 PH/s to the hashrate under its control. Summed with the 70,000 TH/s coming from its 700 Whatsminer M30S+ ASICS (100 TH/s each), this will result in the company having a total hashrate of 197.600 PH/s.
The announcement comes shortly after Ripple SBI Asia CEO Adam Traidman predicted that the mining industry will continue to see hashrate migrate from east to west. He also stated that he is already witnessing the transition begin.
Antminer T19 May Not Affect Bitcoin Hash Rate But Keeps Bitmain Ahead
The Antminer T19 by Bitmain may not have a big impact on the Bitcoin network, and it comes out amid the firm’s internal and post-halving uncertainty.
Earlier this week, Chinese mining-hardware juggernaut Bitmain unveiled its new product, an application-specific integrated circuit called Antminer T19. The Bitcoin (BTC) mining unit is the latest to join the new generation of ASICs — state-of-the-art devices designed to mitigate increased mining difficulty by maximizing the terahashes-per-second output.
The Antminer T19 announcement comes amid the post-halving uncertainty and follows the company’s recent problems with its S17 units. So, can this new machine help Bitmain to reinforce its somewhat hobbled position in the mining sector?
T19: The Cheaper S19
According to the official announcement, the Antminer T19 features a mining speed of 84 TH/s and a power efficiency of 37.5 joules per TH. The chips used in the new device are the same as those equipped in the Antminer S19 and S19 Pro, though it uses the new APW12 version of the power supply system that allows the device to start up faster.
Bitmain usually markets its Antminer T devices as the most cost-effective ones, while the S-series models are presented as the top of the line in terms of productivity for their respective generation, Johnson Xu — the head of research and analytics at Tokensight — explained to Cointelegraph. According to data from F2Pool, one of the largest Bitcoin mining pools, Antminer T19s can generate $3.97 of profit each day, while Antminer S19s and Antminer S19 Pros can earn $4.86 and $6.24, respectively, based on an average electricity cost of $0.05 per kilowatt-hour.
Antminer T19s, which consume 3,150 watts, are being sold for $1,749 per unit. Antminer S19 machines, on the other hand, cost $1,785 and consume 3,250 watts.
Antminer S19 Pro devices, the most efficient of three, are considerably more expensive and go for $2,407. The reason Bitmain is producing another model for the 19 series is due to what is known as “binning” chips, Marc Fresa — the founder of mining firmware company Asic.to — explained to Cointelegraph:
“When chips are designed they are meant to achieve specific performance levels. Chips that fail to hit their target numbers, such as not achieving the power standards or their thermal output, are often ‘Binned.’ Instead of throwing these chips in the garbage bin, these chips are resold into another unit with a lower performance level. In the case of Bitmain S19 chips that don’t make the cutoff are then sold in the T19 for cheaper since they do not perform as well as the counterpart.”
The rollout of a new model “has nothing to do with the fact that machines are not selling well,” Fresa went on to argue, citing the post-halving uncertainty: “The biggest reason machines probably are not selling as well as manufacturers would like is because we are on a bit of a tipping point; The halving just happened, the price can go anyway and the difficulty is continuing to drop.” Product diversification is a common strategy for mining hardware producers, given that customers tend to aim for different specifications, Kristy-Leigh Minehan, a consultant and the former chief technology officer of Genesis Mining, told Cointelegraph:
“ASICs don’t really allow for one model as consumers expect a certain performance level from a machine, and unfortunately silicon is not a perfect process — many times you’ll get a batch that performs better or worse than projected due to the nature of the materials. Thus, you end up with 5–10 different model numbers.”
It is not yet clear how efficient the 19-series devices are because they have not shipped at scale, as Leo Zhang, the founder of Anicca Research, summed up in a conversation with Cointelegraph. The first batch of S19 units reportedly shipped out around May 12, while the T19 shipments will start between June 21 and June 30. It is also worth noting that, at this time, Bitmain only sells up to two T19 miners per user “to prevent hoarding.”
Hardware Problems And Competitors
The latest generation of Bitmain ASICs follows the release of the S17 units, which have received mostly mixed-to-negative reviews in the community. In early May, Arseniy Grusha, the co-founder of crypto consulting and mining firm Wattum, created a Telegram group for consumers unsatisfied with the S17 units they purchased from Bitmain. As Grusha explained to Cointelegraph at the time, out of the 420 Antminer S17+ devices his company bought, roughly 30%, or around 130 machines, turned out to be bad units.
Similarly, Samson Mow, the chief strategy officer of blockchain infrastructure firm Blockstream, tweeted earlier in April that Bitmain customers have a 20%–30% failure rate with Antminer S17 and T17 units. “The Antminer 17 series is generally considered not great,” added Zhang. He additionally noted that Chinese hardware company and competitor Micro BT has been stepping on Bitmain’s toes lately with the release of its highly productive M30 series, which prompted Bitmain to step up its efforts:
“Whatsminer gained significant market share in the past two years. According to their COO, in 2019 MicroBT sold ~35% of the network hashrate. Needless to say Bitmain is under a lot of pressure both from competitors and internal politics. They have been working on the 19 series for a while. The specs and price look very attractive.”
Minehan confirmed that MicroBT has been gaining traction on the market, but refrained from saying that Bitmain is losing market share as a result: “I think MicroBT is offering option and bringing in new participants, and giving farms a choice. Most farms will have both Bitmain and MicroBT side by side, rather than exclusively host one manufacturer.”
“I would say that MicroBT has taken up the existing market share that Canaan has left,” she added, referring to another China-based mining player that recently reported a net loss of $5.6 million in the first quarter of 2020 and cut the price of its mining hardware by up to 50%.
Indeed, some large-scale operations seem to be diversifying their equipment with MicroBT units. Earlier this week, United States mining firm Marathon Patent Group announced that it had installed 700 Whatsminer M30S+ ASICs produced by MicroBT. However, it is also reportedly waiting for a delivery of 1,160 Antminer S19 Pro units produced by Bitmain, meaning that it also remains loyal to the current market leader.
Will The Hash Rate Be Affected?
Bitcoin’s hash rate plummeted 30% soon after the halving occurred as much of the older generation equipment became unprofitable due to the increased mining difficulty. That spurred miners to reshuffle, upgrading their current rigs and selling older machines to places where electricity is cheaper — meaning that some of them had to temporarily unplug.
The situation has stabilized since, with the hash rate fluctuating around 100 TH/s for the past few days. Some experts attribute that to the start of the wet season in Sichuan, a southwest Chinese province where miners take advantage of low hydroelectricity prices between May and October.
The arrival of the new generation of ASICs is expected to drive the hash rate even higher, at least once upgraded units become widely available. So, will the newly revealed T19 model make any impact on the state of the network?
Experts agree that it won’t affect the hash rate to a major degree, as it’s a lower output model compared with the S19 series and MicroBT’s M30 series. Minehan said she doesn’t expect the T19 model “to have a huge impact that’s an immediate cause of concern,” as “most likely this is a run of <3500 units of a particular bin quality.” Similarly, Mark D’Aria, the CEO of crypto consulting firm Bitpro, told Cointelegraph:
“There isn’t a strong reason to expect the new model to significantly affect the hashrate. It might be a slightly more compelling option to a miner with extraordinarily inexpensive electricity, but otherwise they likely would have just purchased an S19 instead.”
Bitmain Continues To Hold Leadership Despite Internal Struggle
At the end of the day, manufacturers are always in an arms race, and mining machines are simply commodity products, Zhang argued in a conversation with Cointelegraph:
“Besides price, performance, and failure rate, there are not many factors that can help a manufacturer differentiate from the others. The relentless competition led to where we are today.”
According to Zhang, as the iteration rate naturally slows down in the future, there will be more facilities using “creative thermal design such as immersion cooling,” hoping to maximize the mining efficiency beyond just using most powerful machines.
As for now, Bitmain remains the leader of the mining race, despite having to deal with the largely defunct 17 series and an intensifying power struggle between its two co-founders, Jihan Wu and Micree Zhan, which recently resulted in reports of a street brawl.
“Due to its recent internal issues, Bitmain is facing challenges to keep its strong position in the future thus they started to look at other things to expand its industry influences,” Xu told Cointelegraph. He added that Bitmain “will still dominate the industry position in the near future due to its network effect,” although its current problems might allow competitors such as MicroBT to catch up.
Earlier this week, the power struggle inside Bitmain intensified even further as Micree Zhan, an ousted executive of the mining titan, reportedly led a group of private guards to overtake the company’s office in Beijing.
Meanwhile, Bitmain continues to expand its operations. Last week, the mining company revealed it was extending its “Ant Training Academy” certification program to North America, with the first courses set to launch in the fall. As such, Bitmain seems to be doubling down on the U.S.-based mining sector, which has been growing recently. The Beijing-based company already operates what it classifies as “the world’s largest” mining facility in Rockdale, Texas, which has a planned capacity of 50 megawatts that can later be expanded to 300 megawatts.
‘Bullish’ — Struggling Miners Done Selling Their Bitcoin, Says Analyst
Bitcoin’s Miner Outflow Multiple shows that buoyant miners are keeping their coins and weaker players have none left to sell, argues Tuur Demeester.
Bitcoin (BTC) miners are setting up a bullish trend despite large sell-offs around the halving, a new data metric suggests.
According to Glassnode’s Miner Outflow Multiple (MOM), outflows from mining pools compared to their one-year moving average are nearing all-time lows.
Demeester “Bullish” On BTC Miner Data
MOM calculates coins leaving mining pools and compares them to the yearly moving average as a ratio.
As of June 3, that ratio was 0.534 — less than half its value one day before the halving on May 10.
By comparison, December 2018 saw mass upheaval due to BTC/USD hitting $3,100. This produced a ratio of around 0.28.
Reacting to the latest reading, Adamant Capital founder Tuur Demeester argued that Bitcoin investors have every reason to be optimistic.
He Tweeted On Friday:
“Healthy bitcoin miners are hodling, and struggling miners have little BTC left to sell. Bullish.”
Bitcoin Channels 2018 Bear Market Bottom
As Cointelegraph reported this week, miner outflows have markedly decreased in the past two weeks. After the halving, there was a brief period in which sales totaled more than miners’ incomes.
Bitcoin’s mining difficulty, which automatically regulates the incentive to participate in the Bitcoin network, is currently on course to repeat another trait from December 2018 — three back-to-back downward adjustments in a row.
Such a phenomenon has only happened twice before, the other occasion being a record eight consecutive drops in 2011.
Bitcoin Mining Difficulty Makes Biggest Jump In 29 Months
Bitcoin has just posted its biggest mining difficulty increase in nearly 2.5 years.
At around 17:00 UTC on Tuesday, the network adjusted its difficulty level – a measure of how hard it is for miners to compete for block rewards on the blockchain – to 15.78 trillion.
The 14.95% rise is the biggest difficulty jump since January 2018, which saw a larger spike on the back of the 2017 crypto market bull run, data compiled by BTC.com shows.
As a result, miners contributing hashing power to the network are now facing the fourth-most difficult two-week mining period in Bitcoin’s history.
The latest increase comes after two consecutive declines in difficulty following the network’s quadrennial halving event on May 11, 2020, which reduced block rewards from 12.5 bitcoin per block to the current 6.25 bitcoin.
The reduction in block rewards initially forced some miners with inefficient hardware and/or more costly electricity resources to halt operations. That led to a decline in Bitcoin’s total hashrate and difficulty until earlier this month.
The difficulty drops on May 20 and June 4, and the sudden reduction in competition, meant that those miners able to continue operating could receive a bigger slice of the pie.
However, the lower difficulty also meant that some who had shut down older mining equipment immediately after the halving could once more turn a profit in the past two weeks. Meanwhile, major miner manufacturers in China have been delivering new, top-of-the-line equipment since May.
These factors have pushed up the average 14-day hash rate on Bitcoin from 98 million terahashes per second (TH/s) earlier this month to now around 113 EH/s.
Out With The Old?
All that said, the fact that Bitcoin’s mining difficulty has quickly bounced back to the pre-halving levels may bring pain for some existing players.
Bitcoin adjusts its mining difficulty every 2,016 blocks, roughly every 14 days, to ensure an average block interval of 10 minutes. When more people choose to plug in during a two-week cycle, the network will see a hash rate increase that will shorten the block interval and will subsequently increase the difficulty for the next cycle.
The current difficulty level of 15.78 trillion follows closely behind the highest three figures ever of 16.55, 16.1 and 15.95 trillion, respectively – all recorded in the two months prior the halving. In other words, miners are facing competitiveness close to that seen prior to the halving, but the daily block subsidies are now down from 1,800 bitcoin to 900.
As a result, each TH/s of computing power is now generating around 0.000008 bitcoin in 24 hours, worth around $0.08 at bitcoin’s current price.
“With the value of hashrate set to decrease to $0.075 cents per TH/s, not many of the existing, old-gen equipment will turn back on,” said Ethan Vera, co-founder and CFO of the Luxor mining pool. “New hashrate coming onto the market will likely be driven by new-gen and high-efficiency machines.”
Kevin Zhang, director of blockchain strategies at New York-based bitcoin mining-power plant hybrid Greenidge Generation, offered a similar view, saying the firm’s strategy is to stay competitive by procuring and running the latest-generation equipment.
“Despite limited price action, we expect the hash rate to continue rising in the near term as more older generation miners go offline and newer generation ones come online,” he said.
As a comparison, the most recent mining devices, like Bitmain’s AntMiner S19, can deliver computing power that’s nearly 10 times that of an older model like the AntMiner S9, but only consumes two times more power.
An on-going power struggle at Bitmain, the world’s largest bitcoin miner maker, will most likely cause delays to delivery of new mining equipment, said Vera, though he thinks the network’s hashrate could still reach 140 million TH/s by the year’s end.
Experts Say Bitcoin Difficulty Adjustment Might Prompt Miners To Switch Off Again
As the network gets readjusted and Bitcoin mining difficulty increases, older generations of mining machines might be out again.
Some Bitcoin (BTC) miners might become unprofitable again as a result of the latest difficulty adjustment.
Earlier this week, the network mining difficulty adjustment saw a 14.95% spike, its largest increase since January 2018. The regular update, which occurs every 2016 blocks, has been pre-coded into the blockchain to keep mining speed at approximately 10 minutes for a block.
The latest adjustment might thwart an emerging trend in the mining sector: older generation machines coming back online after the halving. In May, the Bitcoin block reward was halved, causing a substantial number of miners to pull the plug on older machines, looking to sell their equipment or relocate to places with cheaper electricity.
As Karim Helmy, a data analyst at Coinmetrics, told Cointelegraph, Antminer S9s — a cheaper and once extremely popular mining device produced by Bitmain — started to come back online as a result of two negative adjustments of 9.29% and 6% that preceded the latest upgrade earlier in June.
“So the S9s actually came back after the last difficulty adjustment, which was a large downward move, not this one. Their coming back online was the source of the increase in hashrate that caused this large upward adjustment.”
Thomas Heller, the global business director at leading Bitcoin mining pool F2Pool, confirmed that older generation units saw a comeback after becoming “borderline profitable again.” However, he added that the increased hash rate was also caused by a new generation of ASICs — such as MicroBt M30s and Bitmain Antminer S19s — being turned on for the first time after finally getting shipped to their owners:
“Prior to the difficulty adjustment, the recent hashrate increase is mostly from old-gen machines turning back on, and some M30, S19 and A11 machines turning on for the first time.”
Now that it has essentially become harder to mine Bitcoin, some units might be switching off or migrating to other coins supporting the SHA256 algorithm again, Heller noted:
“A leading indicator is daily mining revenue per TH/s, and right now 1 TH/s will earn you approximately $0.078 per day for BTC mining. It is likely some miners will switch to mine BCH and BSV, and some will turn off machines to wait it out.”
Helmy agreed that older generation miners are likely to come offline again, but noted that conditions on the ground should be “identical to what they were immediately after the halving” for that to happen:
“There are a lot of other factors at play here, including the Chinese rainy season and the price of Bitcoin.”
From the recent adjustment alone, there “won’t be any huge changes to the mining landscape,” Heller argued, concluding:
“The dance between price, hashrate and difficulty will continue, while miners will continue to optimize and try to reduce their OPEX costs.”
Hash Rate Might Experience A Slight Decrease
As observed by Cointelegraph, the BTC hash rate has been fluctuating above 100 EH/s, while a Blockfolio analyst argued that “more hashrate has joined the network than ANY TIME since the historic 2017/18 market bull run.”
Both Heller and Helmy agreed that the hash rate might decrease slightly as a result of a major spike in difficulty, but that would largely depend on other factors, such as electricity price and Bitcoin’s price.
The Coinmetrics specialist also observed that the intensifying power struggle at Bitmain might result in less state-of-the-art miners getting shipped out, which, in turn, could leave the network without extra hash power.
Chinese Mining Company Ebang To Reportedly List On Nasdaq This Week
Ebang will reportedly get listed on Nasdaq on June 26, hoping to raise $125 million in an initial public offering.
Chinese Bitcoin (BTC) miner manufacturer Ebang will reportedly be listed on Nasdaq Global Market under the ticker EBON later this week, becoming the second crypto mining company to go public in the United States.
According to a report from Chinese crypto news outlet Blockbeats, Ebang will be officially listed on Friday, June 26.
Additionally, Blockstream chief strategy officer Samson Mow tweeted a screenshot of an invitation to a Ebang event held at a hotel in Hangzhou, where the company is headquartered, which also starts on Friday.
Ebang Aims To Raise $125 Million, Extending The Original Goal
Ebang filed for a $100 million initial public offering (IPO) with the United States Securities and Exchange Commission in April this year. The firm decided to enter the U.S. stock market after an unsuccessful attempt to conduct a $1 billion IPO in Hong Kong in 2018.
On June 17, the company submitted its latest filing to the SEC, choosing the Nasdaq as its listing exchange.
The Chinese mining player aims to raise $106 million by putting 19.3 million shares on sale at a price range of $4.50 to $6.50, meaning that it now intends to raise up to $125 million, while the initial proposal was hard capped at $100 million. If the IPO is successful, Ebang’s market value could come close to $800 million.
Notably, Ebang’s sales have been decreasing since 2018. In 2019, Ebang’s annual revenue was $109 million, which constituted a 66% drop in growth from $319 million in 2018.
As per the latest filings, 2020 might not necessarily be the comeback year for Ebang despite the overall better market conditions. The company reported a net loss of $2.5 million for the first quarter of the year, blaming the “significant decrease in certain non-recurring local government’s tax rebates,” although it noted that its sales volume has increased since 2019.
“This is great for the Bitcoin mining industry because as more ASIC manufacturers go public we have more transparency and accountability,” Mow told Cointelegraph, stressing that Ebang is “one of the more reliable manufacturers in this space” in his experience.
Other Bitcoin Mining Companies’ IPOs
In November 2019, Canaan became the first Bitcoin mining juggernaut to be listed on a U.S. stock exchange, raising $90 million by selling 10,000,000 shares for $9 each in its IPO, over 75% less than the figure expected originally. Moreover, its stock has plunged since, as it currently trades below $2.
Another Chinese mining giant, Bitmain, quietly filed a Deutsche Bank-backed application for an IPO with the SEC toward the end of 2019, although no details have surfaced since.
Binance Adds Profit Maximization Service To Its Mining Pool
Binance has a new system for helping miners automatically mine the most profitable coins.
Shortly after the launch of its own cryptocurrency mining pool, Binance is adding specialized features to it to help miners make more money.
Earlier this month, Binance Pool launched a new feature called “Smart Pool.” It lets miners automatically switch hash rates to mine the most profitable of three supported coins based on the SHA- 256 algorithm — either Bitcoin (BTC), Bitcoin Cash (BCH) or Bitcoin SV (BSV).
Lisa He, head of Binance Pool, explained that Smart Pool detects the difficulty in different chains using the same algorithm, and it “helps users transfer their computing power to chains with less difficulty and higher rewards.”
Binance pays out the final settlement to miners in BTC regardless of which crypto they actually mine. Lisa suggested that this new feature can increase earnings for those who use it by 1% on average.
In line with the promise to secure maximum returns for miners, the Smart Pool uses real-time hedging to ensure that revenues generated by the service will not be lower than those generated via its standard option, called FPPS (Full Pay Per Share).
In cases where the revenue is lower than what would have been earned via FPPS, the exchange has pledged to pay back the difference to users.
Smart Pool service can be activated with a single click within the mining pool’s regular interface. Miners don’t have to change user ID or their mining stratum URL.
Mining Pool Competition
Although there were concerns about potential centralization effects following the launch of Binance’s pool, it does not appear to currently be commanding a significant share of the Bitcoin network.
Last week, Binance Pool was, however briefly, producing more BSV blocks than any other pool in the market — despite the fact that the coin itself has been delisted from the exchange itself.
As of press time, Huobi is now the single-largest mining pool on the BSV network, commanding a 21.53% share as against Binance’s 11.11%.
US Blockchain Firm Buys 17K Bitcoin Mining Rigs From Bitmain
Core Scientific signs deal to buy Bitcoin mining machines from mining hardware producer Bitmain, company says, as American mining interest goes up.
American blockchain hosting provider Core Scientific signed a deal to buy next-generation Bitcoin (BTC) mining machines from major Chinese mining hardware producer Bitmain.
Core Scientific will purchase more than 17,000 S19 Antminers from Bitmain on behalf of its clients and for its own use. It will be the largest number of S19 machines purchased by a single blockchain hosting company, according to Core Scientific.
Kevin Turner, president and CEO of Core Scientific and the former COO of Microsoft said, “Core Scientific has received and begun testing the first of Bitmain’s newest ASIC miners, and has seen material success in increasing existing hash rate to achieve a 110 TH/s ± 3%.”
The deal comes as Texas has started attracting a number of mining facilities.
Last October, Bitmain opened “the world’s largest” facility for Bitcoin mining in Rockdale, Texas. In January, it was reported that SBI and GMO, two Japanese blockchain-related companies, penned an agreement with Northern Bitcoin AG subsidiary Whinstone to process cryptocurrency transactions at their facility in Rockdale.
Increased Interest In North America
Speaking to Cointelegraph, Russell Cann, Chief Customer Service Officer of Core Scientific, acknowledged the increased interest in growing hash rate via North American mining operations and explained the reason:
“Our view is that this rise in interest and increase in capital allocation and investment can be attributed to the growing acceptance of crypto and/or digital assets as an investment asset class as well as the favorable investing characteristics of North America; specifically, the stable geopolitical and regulatory environment, suitable climatic conditions and multiple energy sources present.”
According to Cann, historically the regulations around mining in other jurisdictions have been “flip-flopped”, creating uncertainty for mining investors. In contrast, hosting mining facilities in North America is beneficial because of “the stability of the power system as well as the regulatory environment around land ownership.”
Moreover, he said the recent collapse of energy pricing makes the North America region more attractive:
“Importantly, with the collapse of energy pricing, the lower cost power areas in the US and Canada, are creating some unique project opportunities for larger-scale miners, like Core Scientific, to consider.”
Yet, it does not mean investors are abandoning other mining operations in such countries as China. Cann suggested that investors are looking to diversify their investments globally.
Stock In Crypto Mining Firms Riot And Hive Massively Outperforms Bitcoin
While shares in Riot Blockchain and Hive Blockchain eclipse Bitcoin’s YTD gains, other mining firms have not fared so well — with Canaan crashing nearly 70%.
The share price of Bitcoin (BTC) mining firms Riot Blockchain and Hive Blockchain has produced enormous year-to-date gains, with stock in Riot nearly doubling while Hive’s has tripled over 2020 so far.
However, not all mining firms have fared well throughout the COVID-19 pandemic, with Canaan’s stock falling nearly 70% since early January, and both Hut 8 and DMG Blockchain seeing scant YTD gains despite experiencing significant volatility this year.
Mining Firms Outperform Bitcoin
While Bitcoin is up more than 26% from roughly $7,200 to $9,100 since the start of the year, the leading cryptocurrency’s gains have been dramatically overshadowed by a handful of firms mining it.
Hive Blockchain has seen a dramatic performance this year, rallying more than 420% from the start of 2020 until mid-February, from $0.066 to $0.345.
The firm’s shares crashed back to $0.118 over the next month as immediate economic fallout from the coronavirus took effect. However, an expansion that led to Hive doubling its mining capacity saw its stock rebound to test the $0.033 area by mid-May.
The firm’s shares have since fallen back to $0.228.
After starting the year trading for $1.22, Riot Blockchain shares rallied to $1.60 by mid-February before crashing to $0.65 in roughly one month. However, Riot produced a strong recovery, gaining over 375% to trade for $3.10 on June 10.
The firm’s shares have since retraced to $2.29.
Riot’s recovery may have been boosted by announcements in May that its mining revenues had grown 70% in the first quarter year-on-year, its plans to roughly double its hash rate after Bitcoin’s block reward halving, and the dismissal of pump-and-dump complaints against the firm.
Riot also expanded its total hash rate capability after establishing a hosting arrangement for its Antminer S17s with fellow mining firm Coinmint in April after facing disruptions resulting from COVID-19.
Canaan’s Shares Plummet In 2020
However, the gains enjoyed by Riot and Hive are certainly not indicative of all miners, with Canaan suffering huge losses over 2020 so far.
After starting the year at $6.02, Canaan shed over a quarter of its value by mid-Feb — when a sudden spike pushed prices up to $8.04 in a single day. Canaan’s stock then plummeted to $2.81 in mid-March, before embarking on a steady recovery to retest $6 two months later.
Since May 14, Canaan’s price has crashed by more than two-thirds to currently trade for $1.82.
While the YTD performance for Hut 8 and DMG Blockchain are currently sitting at an approximate break-even, both firms have seen extreme volatility during 2020.
Both Riot and DMG produced sudden spikes of over 60% in February followed by crashes of at least 60% by mid-March and a recovery back to trade at early-January levels.
Venezuelan Authorities Seize Over 300 Bitcoin Mining Machines
Venezuelan authorities confiscated 315 Bitcoin mining systems.
The Bolivarian National Guard of Puerto Ordaz, Venezuela, seized 315 Bitcoin (BTC) mining machines manufactured by Bitmain. The owners of the mining rigs were told that they did not possess the necessary permits to own and operate the machines. They also were not authorized to be transporting the machines during the COVID-19 quarantine.
According to current legislation, Venezuelan citizens who are interested in conducting crypto-related mining activities must obtain the appropriate permits from a government office called the National Superintendence of Cryptoactives. Owners who fail to obtain these permits risk being fined, and having their equipment confiscated.
Kazakhstan Sets Eyes on Top-3 Spot For Global Bitcoin Mining
The post-Soviet country’s cheap electricity has been attracting Bitcoin miners, but will it manage to elbow out Russia and the United States?
Kazakhstan is becoming an important destination for Bitcoin (BTC) miners seeking cheap electricity in the post-halving market driven by thinner margins.
According to recent reports, the oil-rich Central Asian country expects the total amount of money invested in local crypto mining operations to double by the end of 2020 and attract $738 million over the next three years.
Unlike other countries in Central Asia, the Kazakh government has de facto legalized crypto mining, which makes the market more attractive for both local and foreign players. So, could this vast semidesert land become the new go-to spot for BTC miners?
From Blanket Crypto Ban To Legalization
The Kazakh government has adopted an overall friendly approach to crypto recently, although there is still little regulatory clarity on the subject. However, positive developments were preceded by regulatory turbulence, and at some point, its central bank went as far as to suggest a blanket ban on cryptocurrencies.
In early 2018, the chairman of the National Bank of Kazakhstan, Daniyar Akishev, declared that his agency was considering outlawing all cryptocurrencies.
Just a few months later, Kazakhstan’s president, Nursultan Nazarbayev, called for global cooperation in crypto regulation but did not mention whether this regulation should encourage the sector’s growth or its containment.
Previously in 2017, Kazakhstan’s government-supported Astana International Finance Center signed a deal with Malta-based firm Exante to develop the Kazakh digital asset market, while the central bank announced it was considering using blockchain to sell short-term debt notes to investors.
Things started to look more concrete and positive for local crypto miners in 2019. In December of last year, local media reported that Kazakhstan’s lawmakers wouldn’t be taxing cryptocurrency mining until the mined assets are exchanged for fiat money, as crypto mining would not be treated as an entrepreneurial activity but rather a “purely technological process.”
A recent bill, which was approved by the Kazakh Senate and signed into law by Nazarbayev earlier in June, essentially legalizes mining, saying that people involved in digital mining are obliged to inform the authorities about their activities. It also stresses that miners are the legal owners of the digital assets they produce.
Didar Bekbauov, founder of crypto mining marketplace Xive — a local company providing hosting services for large-scale international miners — and who previously worked at Hive Mining, told Cointelegraph that the current regulation is not strict, but stressed that the framework hasn’t been finalized yet: “The bill says miners need to report to [the] government about their activities. But nobody still knows how it will be in practice. Other than that no regulations.”
Cheap Electricity Attracts Foreign Players
According to Bekbauov, the main mining players in Kazakhstan are foreign companies from China, Japan and “other Asian countries.” There is also Genesis Mining, an international cloud mining company with farms located across several countries, and Bitfury, another non-Chinese mining powerhouse headquartered in Amsterdam.
“They are miners with experience, some private funds, private investors,” Bekbauov said of the companies mining away in Kazakhstan. The Xive founder added that around 90% of their mining activities are performed on the Bitcoin blockchain, and he said that the arrival of foreign companies doesn’t make it harder for local mom-and-pop mining operations, as Kazakhstan “still has excess electricity generation.”
Therefore, the main attraction for miners is not the regulatory framework, which still remains ambiguous despite some positive developments, but rather the abnormally cheap electricity rates. As of December 2019, the price of electricity in Kazakhstan was $0.041 per kilowatt-hour for households and $0.049 for businesses. For comparison, the average electricity price in the United States is $0.14, although some states such as Texas seem to be offering competitive prices under certain conditions.
The price of electricity has always been one of the main factors when it comes to cryptocurrency mining, but it has become even more important after the Bitcoin halving took place back in May. The halved reward prompted miners to either sell their equipment or relocate to regions with cheaper electricity such as Kazakhstan, Russia, the Middle East and South America.
Along with the abundance of cheap electricity, Kazakhstan’s geographical position also makes it “a fast-growing hotbed for Bitcoin mining action,” according to Thomas Heller, global business director of F2Pool, who also told Cointelegraph:
“Kazakhstan is located in an optimal location for mining. The climate is cool, and is in close proximity to China. It’s becoming a popular location for Chinese miners to move old-gen machines from China to Kazakhstan to take advantage of cheaper electricity prices outside of the Sichuan Hydro Season.”
Bekbauov said that most local mining operations are located in regions with high electricity generation — such as Ekibastuz, Karagandy, Pavlodar and Taraz — while the country has an overall good climate for crypto mining throughout most of the year. Dmitrii Ushakov, chief commercial officer of BitRiver — a major co-location services provider for Bitcoin mining in the Commonwealth of Independent States region — confirmed that the cheap electricity prices in Kazakhstan are luring investors in, telling Cointelegraph: “Miners can currently find very attractive electricity prices for mining in Kazakhstan and some other former Soviet countries. This is the main reason for the current interest in mining in Kazakhstan.”
However, Ushakov added that there are “no natural prerequisites for cheap electricity in the country,” as it is mainly produced by coal-fired power plants.
He elaborated, expanding on some other drawbacks of Kazakhstan-based mining, namely an overall unstable situation in the region and inadequate safety of local mining farms:
“This is risky because the markets and other factors affecting the price of such electricity within a nation can change quickly. Another aspect that should be considered here is the safety of these mining sites, which are often set up in a very short time by using pre-existing infrastructure that is old and unreliable.”
Will Kazakhstan Become A Top-Three Mining Destination?
Last month, Kazakhstan’s minister of digital development, innovation and aerospace industry, Askar Zhumagaliyev, announced that the department is planning to attract 300 billion tenge, or $738 million, worth of investments by 2023 for activities related to cryptocurrency mining.
Kazakhstan’s ambitious mining plans might seem staggering at first, but the country has some statistics to back them up. According to Zhumagaliyev, there are currently 14 cryptocurrency mining farms that have already brought in approximately $201.7 million of investments combined.
Further, the Bitcoin Mining Map designed by the Cambridge Center for Alternative Finance at the Judge Business School of the University of Cambridge shows that the countries in the CIS region combined comprise the fourth largest region for crypto mining globally. In the second quarter of 2020, mining in Kazakhstan has reportedly made up about 6.17% of the average monthly Bitcoin hash rate, which is only slightly behind Russia (6.9%) and the United States (7.24%), while China remains the undisputed king (over 65%). Alejandro De La Torre, vice president of mining pool Poolin, agreed that under certain conditions, Kazakhstan could become third in the near future:
“With the abundance of cheap electrical prices, mild temperatures and the governments ’hands-off’ approach to mining, I do indeed foresee Kazakhstan becoming a top-3 crypto mining destination.”
Other experts are more skeptical. BitRiver’s Ushakov argued that although low electricity prices are a solid advantage for Kazakhstan in the mining race, the region itself isn’t stable enough to witness significant growth:
“Although low electricity prices make Kazakhstan a hot destination to mine, we believe that China, Russia and the USA will continue to be the top-3 mining destinations in the world because of increasing investments in mining, predictable energy policies and a more stable political as well as economic environment for mining.”
Kristy-Leigh Minehan, a mining consultant and former chief technology officer of Core Scientific, told Cointelegraph that she does not expect Kazakhstan to become a top-three destination anytime soon due to an apparent lack of interest from institutional players: “Bitcoin mining is becoming the destination of institutional investment that seeks an alternate asset base; many are still very shy with regards to Kazakhstan’s politics.”
Switching Bitcoin to 100% ASIC Mining Could Increase Security 2,000X
ASIC miners are the best option for Bitcoin network security well into the future, new research has found.
The wholesale embrace of Application-Specific Integrated Circuits (ASIC) mining for Bitcoin (BTC) could increase the cost of a 51% attack by a factor of up to 2,000.
Rod Garratt University of California Santa Barbara presented the research he co-authored with Maarten van Oordt from the Bank of Canada at the Unitize conference on July 10.
It examined the varying costs of a 51% attack on the Bitcoin network based on the type of equipment used to secure the network. The research suggests by simply switching the network 100% ASIC miners ongoing security can be enhanced greatly.
The main reason is because ASIC miners have little use, and little value, outside of Bitcoin mining and an attacker would not be able to obtain much of a return from the sale of equipment used in an attack. Consequently, in order to perform a profitable attack, they would need to double spend a much higher volume of coins, which is more costly and difficult to do.
The research estimated that for an attack occurring after the next halving to be profitable, it would require between 157,000 – 530,000 Bitcoin if 100% ASIC mining was in place.
What Is A 51% Attack?
A 51% attack is when a malicious participant seeks to manipulate a blockchain network by controlling 51% of the mining power (this is the minimum needed to accept new blocks). The attacker then creates an alternate chain of blocks to the ‘real’ chain, and transitions the rest of the network to accept the new, manipulated chain as the correct one.
The most common use-case for this style of attack is to spend the same coins twice, commonly referred to as a double spend.
Concerns Over Bitcoin’s Security
Some in the Bitcoin community are adverse to ASIC miners, which caused a hard fork in 2017 that resulted in ASIC-resistant Bitcoin Gold being created. Garratt said this was why Bitcoin Gold had a number of successful 51% attacks resulting in the double-spend of $18 million in coins, while Bitcoin is yet to receive its first successful attack. However, it is vastly more expensive to attack Bitcoin, which is also a big factor.
Some Bitcoin network participants are concerned over the long term security of the blockchain network as block rewards are replaced with transaction fees, he explained, which leaves miners relying on transaction fees as their rewards.
The potential danger is that once miners are relying on transaction fees, they will react to large price fluctuations by turning off their miners, making it more cost effective to perform an attack on the network.
Garratt mentions another security benefit from using ASIC machines is that miners are much less likely to switch off their equipment as a result of price fluctuations, increasing the strength of the network against price fluctuations.
Bitcoin Mining Difficulty Hits Record High of 17.3 Trillion
Just two months after May’s Bitcoin halving event, both hash rate and difficulty have shrugged off post halving dips to hit new all-time highs.
Following last week’s record-high Bitcoin hash rate, the latest difficulty adjustment saw a change of +9.89%, bringing the level to a new all-time high of over 17.3 trillion on July 13.
Despite a lack of recent significant Bitcoin (BTC) price action, the fundamentals securing the network are as healthy as they’ve ever been. This is more positive news for investors concerned about a previous drop in hash rate and difficulty after May’s third reward halving event.
Concerns Over Halving Unsubstantiated
Some analysts predicted that the reward halving earlier this year would lead to mass capitulation from unprofitable miners.
There was a significant drop in hash rate immediately after the halving, followed by two reductions in the mining difficulty. But an upwards difficulty adjustment of 14.95% last month almost reversed the previous two falls on its own.
With both hash rate and difficulty now at historic highs, any concerns around the impact of the halving now seem to have been proven unfounded.
Keeping Bitcoin Ticking Along At 1 Block Per 10 Minutes
The mining difficulty gets automatically adjusted every 2016 blocks (or approximately 14 days), in order to ensure that new blocks are produced every 10 minutes on average.
It generally fluctuates with the hash rate (increasing hash power means quicker blocks so difficulty must also be increased), although the overarching trend tends to be upwards.
Higher difficulty can also have an impact on mining profitability, which causes some miners to sell up. When this happens, it can potentially force the hash rate back down again.
Fidelity International Doubles Stake in Bitcoin Mining Firm Hut 8
Billion-dollar fund manager Fidelity International has doubled its equity investment in bitcoin mining company Hut 8, bringing its total stake to over 10%.
- In a filing with the Ontario Securities Commission (OSC) last week, the fund manager disclosed it had acquired 4.1 million “units” in Hut 8 on June 23 in an overnight offering.
- Each unit represents a combined offering of one common share and the option to purchase another in the next 18 months.
- Fidelity International, a spin-off of Fidelity Investments, already held approximately 4 million common shares in Hut 8.
- Last month’s purchase, including the options, means it now controls over 10.5% of the Toronto-listed crypto mining company.
- Hut 8 closed a C$8.3 million funding round (US$6.1 million) on June 23, with the total raise being over C$800,000 above its target.
- Fidelity’s investment may have comprised nearly three-quarters of the raise, based on the total of around 5.7 million units changing hands.
- CoinDesk has approached Hut 8 for more information.
- In an overnight offering, a company sells equity once the market has closed at the end-of-day price to prevent short-sellers from depressing it any further.
- Hut 8’s share price spiraled since listing on the Toronto Stock Exchange, falling from $3.35 in April 2018 to a low of $0.50 in March 2020.
- Fidelity may be bullish about Hut 8, though, as the option for a common share is at a purchase price of $1.80 – more than double its current trading value of over $0.80 at press time.
- The news was tweeted by CoinDesk’s Matt Yamamoto earlier on Monday.
10,000 Antminers Go ‘Missing’ In Latest Chapter Of Bitmain Power Saga
Former Bitmain staff have been accused of “illegally” moving 10,000 Antiminers from a company-owned mining facility in Mongolia.
In the ongoing power struggle at cryptocurrency mining giant Bitmain, not only have accusations of “illegal power seizures” made headlines, but now the physical theft of mining hardware as well.
A new post on Bitmain-owned Antminer’s WeChat channel alleges that former Bitmain staff have “illegally moved” 10,000 Antiminer Bitcoin (BTC) mining rigs from a company-owned facility in Mongolia.
The machines — among them models from the S17 and T17 series and flagship S9 miners — were reportedly removed in mid-July, causing “serious economic losses to the company and customers.” The incident has been reported to the police and public security authorities.
At stake is not only Bitmain’s own hardware, but also that belonging to clients who choose to have their mining hardware operated and hosted at the manufacturer’s mining farms.
In a post to Bitmain’s Weibo account, co-founder Micree Ketuan Zhan — one half of the duo at loggerheads over power at Bitmain — accused his co-founder Jihan Wu of being responsible for the “illegal transfer” of the machines.
Power, Property And Office Brawls
The backdrop to this week’s moved miner saga is a conflict raging over which of the two co-founders has the position of legal representative at Bitmain.
Since October 2019 — when Wu reportedly ousted Zhan in what the latter referred to as an “illegal power seizure” — the pair have been embroiled in an extremely public battle over control of the firm.
Bitmain’s chief financial officer was arrested in May after allegedly participating in a purported “mob attack” on Zhan, in response to the latter’s controversial attempt to wrest back the role of legal representative at Bitmain’s Chinese subsidiary.
In June, reports on the intensifying struggle alleged that Zhan had hired guards to forcibly seize control of Bitmain’s Beijing office. Zhan has also pursued legal action in his bid to regain control.
At present, Wu retains formal authority over Bitmain’s Hong Kong-based operations, and the firm reaffirmed Zhan’s October ousting again this spring. Zhan continues — by various means — in his attempts to regain control of operations in the mainland.
Ethereum Miners’ Income Soars By 60% In A Month And Outruns Ether’s Price Jump
The daily income earned by Ethereum miners has soared by over 60% in a month, according to data tracked by Ethereum mining pool Sparkpool.
The surge in daily profit from Ethereum mining surge has also outpaced ether‘s (ETH) price jump of 40% over the same period.
The profitability rise comes thanks to soaring transaction fees on the network, as well as relatively slow growth in competition from other miners.
Sparkpool’s data shows Ethereum miners’ daily income was around $1.85 per 100 megahashes second (MH/s) on the network on June 27. Over the past month, and the last two weeks in particular, this has jumped by 60% and reached as high as $3.27 on July 25. The metric has since dropped back to around $3.
During the same period, ether’s price has gone up by nearly 40%, from $229 on June 27 to $327 at time of writing, the highest price point for over a year.
Transaction fees on the network, which form part of a miner’s daily revenue, have reached a two-year high as the hype around decentralized finance (DeFi) brought a spike in network activities.
However, the total computing power competing on the world’s second largest blockchain network by market capitalization has remained steady around 190 petahashes per second, blockchain explorer Etherscan shows.
In fact, data from Bitinfocharts indicates daily mining revenue on Ethereum had remained below $2 per 100 MH/s during the first quarter of the year and dropped to $1 per 100 MH/s following the crypto market crash on March 12. But in the four months since, daily mining revenue has tripled.
Currently, some state-of-art Ethereum mining equipment, such as InnoSilicon’s A10 Pro with a computing power of 485 megahashes per second (MH/s), can generate $12.92 in daily revenue at Ethereum’s current price and mining difficulty.
With an electricity of cost of $0.03 per kilowatt-hour (kWh), one A10 Pro machine is able to bring home a daily net profit of nearly $12, according to mining pool F2Pool’s miner profitability tracker.
Profit at that level exceeds some top-of-the-line Bitcoin miners by almost 100%, although bitcoin’s price has jumped above $10,000 over the weekend for the first time since early June. The sudden increase came after weeks of low price volatility that kept the cryptocurrency stuck between $9,000 and $9,500.
However, Bitcoin’s mining difficulty is still around its all-time-high. As such, even the most efficient Bitcoin miners, like MicroBT’s WhatsMiner M30S++ and Bitmain’s AntMiner S19 Pro, are generating a daily revenue of $9 per unit.
At an electricity cost of $0.03 per kWh, that would provide a daily profit of around $6.50 at bitcoin’s current price and difficulty, data from mining pool PoolIn shows. In general, industrial electricity cost for crypto mining can range between $0.03 to $0.06 per kWh.
Marathon Boosting Bitcoin Mining Game With 1,360 More Rigs Arriving In August
Publicly traded cryptocurrency mining firm Marathon Patent Group is planning to receive 1,360 additional bitcoin mining rigs in August in a rollout that will rocket its Quebec facility’s hashpower up 320% to 184 peta hashes.
* The company said in a press release it expects 700 newly bought M31S+ ASIC Miners from MicroBT and 660 previously ordered Bitmain S-19 Pro Miners to arrive in mid-August.
* Marathon has purchased 3,020 total rigs from the fiercely competitive mining rivals in the past few months. It already has 700 active MicroBT miners, and, in addition to the August arrivals, is waiting on 1,000 more from Bitmain coming in Q4.
* “Based on current bitcoin prices, the company would expect to become cash flow positive” once it installs the August rigs, CEO Merrick Okamoto said in a press statement.
Iranian Authorities Greenlight Power Plants Mining Bitcoin
According to Iranian authorities, power plants can mine cryptocurrencies like Bitcoin, but will not be able to take advantage of subsidies.
Iran has announced that it will now allow industrial-scale power plants in the country to operate as Bitcoin miners —- provided they don’t use subsidized fuel.
In a statement to the Islamic Republic News Agency (IRNA) on July 27, Mostafa Rajabi Mashhadi, a Deputy Managing Director at Tavanir, Iran’s Power Generation, Transmission and Distribution Management Company, said power plants in the country could operate as Bitcoin mines “if they comply with approved tariffs” and have the necessary licenses.
Mashhadi said that any power plant considering such a venture could not use subsidized fuel for crypto mining.
“Now we’re in a situation where the supply of electricity is of great importance to the public,” the energy spokesman said. “We will not allow anyone to misuse tariffs provided for the agricultural and industrial sectors to produce Bitcoin while it’s worth more than $9,000.”
All About Power
Cointelegraph reported in January that Iran’s Ministry of Industries, Mining and Trade had issued 1,000 licenses for crypto mining since the government authorized it as an approved industrial activity in July 2019.
According to the IRNA, a spokesman for the electricity industry said 14 crypto miners in Iran had requested more than 300 megawatt (MW) of power — equivalent to the usage across three provinces in the country.
The tariff scheme for crypto miners in Iran is dependent on market factors such as fuel prices in the Middle East. Mining requires a lot of power, but the country’s electricity is very cheap compared to the rest of the world. Mashhadi estimated in 2019 that the production of a single Bitcoin would use only about $1,400 in state subsidies.
People who expose illegally operating cryptocurrency mining companies in Iran also receive a bounty of up to 100 million Rials, or $2,375.
3 Reasons Not To Panic As Bitcoin Miners To Exchange Flow Spikes 46%
On-chain data shows miners have sold more than they mined in the past week, but this might not necessarily impact BTC price for three reasons.
The latest on-chain data from July 30 suggests miners are preparing to sell Bitcoin (BTC). According to data analytics resource Glassnode, miners’ outflows to exchanges increased significantly in the last 24 hours.
There are three possible reasons the miner to exchange flow might not largely affect Bitcoin’s price. First, the potential sell-off from miners coincides with the rejection of Bitcoin at $11,400.
Second, while a 46.5% increase seems significant, this is only $94,000 at current BTC prices. Given that the Bitcoin exchange market reportedly processes $24 billion per day, it is not a relatively significant amount of BTC. Third, some market commentators say the short-term market structure of BTC alongside strengthening fundamentals paint an optimistic picture.
Bitcoin Already Rejected From $11,400
On July 28, the price of Bitcoin peaked at $11,400 across many exchanges. Since then, BTC dropped to as low as $10,800, marking a 5% drop.
According to data from ByteTree, miners sold around 510 BTC more than what they mined in the last seven days. In one week, miners produced 6,556 BTC and sold 7,060, recording a minor negative net inventory.
Given that the price of Bitcoin already fell by 5% in the past 48 hours, there is a high probability that the market likely priced in the miner sell-off. If that is the case, this extra supply is unlikely to affect BTC/USD in the near-term.
Not A Big Net Spend
Additionally, the 500 BTC net spend is not high relative to the usual net spend of miners in most weeks. Miners likely sold slightly more BTC to cover expenses, but that could mean lower net spend in the upcoming weeks.
Historical data shows miners often sell most of the Bitcoin they mine regularly. For example, a 500 BTC sell order in the exchange market, which equates to $5 million, is not relatively high or uncommon.
Compelling Short-Term Market Structure
Meanwhile, traders see a positive near-term trend for Bitcoin due to its recovery from the recent dip. After BTC declined to $10,800, it rebounded quickly back above $11,000.
Initially, BTC saw a breakdown from the $11,200 to $11,400 resistance range. The recovery to $11,000 and a strong hourly candle could sway the momentum, according to recent technical analysis.
Jonny Moe, A Bitcoin Trader, Noted:
“If you caught shorts on the wedge breakdown, this is the kind of hourly candle that should make you consider covering.”
The market bias around Bitcoin is seemingly swaying bullish. Data from Binance Futures suggests 58% of “top traders” on the platform are holding long positions on BTC.
While the market remains majority long, the price action has cooled down since earlier this week. Funding rates of perpetual futures contracts, across the board, have declined. That suggests the market is less overheated, and traders see a favorable market structure in the short-term.
Moreover, despite the miner to exchange flow uptick, the amount of BTC held on exchanges has dropped to the lowest levels since right before the summer 2019 bull run. Thus, the confluence of a decent-size pullback, a neutral futures market, and a relatively small miner sell-off could sustain Bitcoin’s momentum.
Bitmain Delays Bitcoin Miner Shipments By Three Months As Co-Founders Battle On
The escalating internal power struggle at Bitmain is starting to have a more serious impact on its business and customers.
* The Beijing-based bitcoin miner maker said via the official WeChat account of its AntMiner brand Thursday that customers whose equipment were due in June and July will have to wait until September and October.
* The delay is caused by “external interference over the company’s management,” the official account said.
* It’s important to note that bitcoin miners are typically sold via pre-orders, which must be made two to three months in advance.
* That means customers who ordered the June and July batches could have placed their orders as early as March and April.
* The delay comes amid the escalating fight for control of Bitmain between its two co-founders, Wu Jihan and Micree Zhan Ketuan, which has essentially “hard-forked” the firm’s bitcoin miner production.
* Currently, the official WeChat account of the AntMiner brand is controlled by Wu’s faction within the firm.
* Zhan was ousted by Wu in October, but returned to power in June and has controlled Bitmain’s Shenzhen-based factory since then.
* The situation threatens to become a kind of stalemate: Zhan’s side will likely not have an easier time with shipments either, as Wu also controls the miner chip supply chain via Beijing Bitmain’s parent entity in Hong Kong.
* Bitmain is now offering two mutually exclusive options for customers whose orders are delayed.
* The first option is to send Bitmain a written request to speed up the delivery. If they still don’t receive their machines 60 days after the notice, they can request a refund.
* The second is to wait patiently until the actual delivery, with Bitmain saying it will compensate customers with their theoretical mining revenue between now and delivery in the form of cash coupons to be used in future purchases.
How Miners Can Hedge Their Inventory To Increase Return On Investment
Strategies from the world of traditional finance could offer promise for miners who want to lower the risk associated with holding inventory.
To a newcomer, crypto mining may sound deceptively easy — essentially, a way to switch on a machine, walk away and watch the lucrative crypto rewards roll in. But the reality is a little more complicated.
The oldest and most powerful crypto out there, Bitcoin (BTC), uses a proof-of-work algorithm to ensure it’s blockchain’s security, and plenty of other influential cryptos have followed suit.
Miners in PoW protocols receive a crypto reward whenever they’re the first to submit a correct answer to the cryptographic math problem that seals each new block of data on the blockchain. The more miners there are operating on one blockchain network, the stiffer the competition becomes to solve this problem and win a crypto reward.
To improve their chances, miners generally use hardware rigs that demand more and more hardware components and electricity to become more powerful.
Crypto miners need to make significant rig investments and pay high monthly electricity bills if they want any chance of earning a mining reward more than once or twice in a blue moon.
Regions with cheaper electricity tend to attract more miners, but even among these operations, profit margins tend to be tight.
As a result, miners generally sell off their mined crypto as soon as they can. Selling their earnings for fiat not only helps them keep their rigs turned on but also lowers the risk of wiping out their profits or even having their capital sunk into mining equipment if market prices drop.
That cautious business model also makes it harder for miners to earn a high return on investment, which is enjoyed by more institutional crypto traders — especially when they have access to sophisticated strategies borrowed from the world of derivatives and traditional finance.
But as crypto markets continue to mature, more and more asset classes become available to miners and can help them earn a higher ROI on their mining investment — without risking huge losses in a volatile crypto market.
High-interest accounts are an ideal low-risk solution for any crypto owners who feel bullish about their assets and prefer to hold. Miners can deposit their inventory with account providers, who use those held assets to provide loans to vetted crypto users looking for extra capital.
The borrowers repay their loans to the account providers over time with interest, and the account provider shares that interest with the account holder. These accounts tend to generate more interest the longer account owners agree to lock up their funds. Typical accounts with popular services such as Compound, BlockFi, Celsius and DeFiner offer 5%–10% annualized returns.
Crypto experiences market volatility like any other commodity — and futures contracts can help miners turn that volatility into a revenue generator. Futures contracts are securitized agreements to sell and buy an asset at a price and time agreed upon when the future is created.
Crypto miners can lock up some of their crypto inventory in a futures contract and sell that contract for more than the crypto’s current marketplace value.
During periods of a market condition called contango, futures contracts are priced higher than their current “spot price” — the market price traders pay to immediately acquire the asset.
The difference between futures prices and spot prices is also referred to as the premium to spot pricing. Instead of selling their newly mined crypto for the current spot prices, miners can sell a dated futures contract to lock in that premium.
While exploring futures contracts, miners should be aware that they’re often cash-settled, meaning upon expiration, the futures seller will transfer the cash equivalent of the buyer’s promised position in the underlying asset’s market rather than the asset itself.
Cash settlement is of limited use to crypto miners who actually own and eventually want to transfer their tokens, so miners should focus on physically settled futures contracts to ensure that their inventory actually changes owners.
Someone selling an option isn’t selling an asset itself — rather, they’re selling the right, but not the obligation, to buy that asset at a set price (called a strike price) at a later, agreed-upon time. Miners can sell options on their existing inventory and future inventory.
After selling options on future inventory, they can use revenue from the sale to increase their mining operation’s output per day, setting them on the right track to meet future obligations created by the options. Traders can also sell options that are “in the money,” which means that their eventual strike price is lower than the crypto asset’s current price.
If the market price is still above the strike price when the contract expires, the option holder is likely to exercise it, and the miner sells their inventory at the agreed-upon strike price as indicated in the options contract.
If the market price is below the strike price, then the holder won’t exercise it because they could get the same amount of crypto for cheaper going directly through the market. With the option expired and unused, the crypto miner gets to keep both the original crypto inventory and the premium they made selling the option in the first place.
Contracts are key to implementing a “Collar,” one of the most common hedging strategies for crypto inventory. To use a Collar, miners buy two kinds of options simultaneously. They would buy a put option below the market price of the asset, which is the right to sell the token at a set time and price. However, they would sell a call option above the market price of the asset, which is the right to buy the token at a set time and price.
Sale of the call option generates the revenue needed to cover purchasing the put and only cuts into the trader’s profit if the token’s spot price eventually increases above the price delineated in the call option.
If the token’s market price drops below a certain benchmark, miners can exercise their put option at its expiration and sell off their inventory at the put’s price rather than actual, lower market prices. The Collar thus keeps the miner from experiencing huge losses or huge gains even in a volatile market.
Collar Options Strategy Setup Example
In this example, the miner has asset protection in the event the price drops below $220, however, the profit is limited if the asset price rises past $260 due to the sale of the call option.
The net cost of protection is a profit here due to the difference between the sale and purchase of the call and put, respectively. The maximum profit is limited to $23 and the maximum loss at $17, given the current ETH/USD price of $239.
Over-the-counter negotiations go through avenues outside of exchanges and other public venues, happening instead mostly through brokerages and private transactions. Most crypto miners who use OTC services sell forward contracts. Forward contracts, much like futures contracts, consist of agreements to sell an asset at an agreed-upon time and price.
But while futures contracts are standardized to be bought and sold in trading venues, forward contracts tend to be customized to meet the needs of each buyer and seller.
Some customizable aspects include the amount of the asset and the agreed-upon date but can generally include any terms, given all parties involved agree to them.
Miners can sell forward contracts on inventory they don’t even own yet through OTC negotiations and use the sale revenue to expand their mining operation, which makes it more likely they’ll end the contract both meeting its inventory terms and possessing a more powerful mining rig.
The aforementioned strategies are from the world of traditional finance, and they can offer some promise for miners who want to increase their ROI without increasing the risk associated with holding inventory.
In addition to immediate ROI increases and higher inventory retention, these strategies could also make overall market conditions better for market participants as a whole. Without the constant supply pressure of miners trying to offload their mining rewards immediately, crypto prices are likely to go up, making rewards more valuable and mining more profitable.
In practice, sophisticated miners will likely use a combination of these strategies. For example, miners may opt to hold the majority of their inventory in interest-bearing accounts and a smaller portion on a derivatives trading venue where traders buy and sell options and contracts to hedge their overall position.
Derivative platforms typically provide leverage on the collateral posted at the venue, and miners will benefit from the time duration associated with the derivative contracts. Executing this strategy will undoubtedly both increase the return on the investment for the mine operators and improve market pricing as a whole.
Why Chinese Miners Won’t Stage A 51% Attack On Bitcoin
Jameson Lopp explains why attacks on Bitcoin won’t work and that he expects China’s mining dominance won’t last.
China accounts for more than half of the world’s Bitcoin mining capacity but Jameson Lopp, the co-founder and CTO of Casa, has hosed down fears that Chinese miners are a threat to Bitcoin in a blog post on Aug. 9.
Although many people have raised concerns over the concentration of such much hashpower being located in China, Loop pointed out that even in the event of a 51% attack on Bitcoin, attackers are limited in what they can actually do.
He explained that attackers can’t steal people’s Bitcoin arbitrarily, nor change the consensus rules. They can’t reverse valid transactions. The only thing they can do is double spend their own Bitcoin.
The best way for a 51% attacker to seek maximum profit is to cash out via crypto exchanges into “censorship resistant cryptocurrency or stablecoin”. However, this presents big problems in terms of withdrawal limits and Know Your Customer requirements among exchanges. It also doesn’t make much economical sense for attackers to dump a big chunk of Bitcoin at once:
“The value of the Bitcoin you still hold after the attack will likely have decreased substantially, thus a successful large attack could actually result in shooting yourself in the foot. You’d better not slip up while you’re accessing the exchange you target. For example, one hacker returned $25M in stolen funds after leaking their IP address.”
Bitcoiners To The Rescue
Loop thinks it would be nearly impossible for a nation state to get in total control of mining facilities and that Bitcoin stakeholders would take immediate emergency actions against such an act.
Even if the attack shifts from targeting individual mining facilities to an easier attack of mining — 70% of hashpower in China is coordinated via fewer than 10 mining pools — switching mining pools is incredibly easy for miners. It’s also difficult to pull off covertly as there are plenty of independent companies putting out social media alerts against malicious actors.
“It’s hard to imagine a scenario in which a state actor would be able to quickly and covertly seize enough hashpower to perform an ongoing attack that lasts more than a few hours.”
According to Lopp, the reason hashpower has been concentrated in China ever since 2015 is due to the fact most of the mining chips are produced in Asia. Most importantly China also has “an abundance of cheap energy” and has the political and economical stability to facilitate the mining infrastructures.
Loop concluded any large-scale mining attack is going to be “limited in its effectiveness”. As Cointelegraph reported before, in the long run, competition in semiconductor production and cheaper power sources will continue to rise globally and China’s mining dominance will not last.
Mining Firm Hut 8 Reports 28% Drop In Q2 Revenue Following Bitcoin Halving
Canadian bitcoin miner Hut 8 announced its Q2 2020 earnings Thursday, reporting a sharp drop in revenue. However, the rising value of the firm’s bitcoin holdings helped Hut 8 finish the quarter in the black.
The publicly traded company mined 795 bitcoin (BTC) last quarter, a 29% decrease from the 1,116 BTC mined during the prior quarter. As a result, revenue declined 28% to C$9.2 million (US$7 million).
Management mainly attributed this to the bitcoin halving that took place on May 11, writing:
“The network difficulty decreased subsequent to the halving by 15%, but quickly returned back to levels prior to the halving. This posed a difficult challenge to many bitcoin miners as they saw the bitcoin block reward drop by 50% with similar network difficulty rates meaning that revenue dropped by nearly 50% for all bitcoin miners, including Hut 8.”
Despite a C$6.4 million gross loss for Q2, Hut 8 reported C$2.8 million in net income – thanks to a C$9.4 million gain on the re-measurement of its bitcoin holdings. Hut 8 has 2,954 BTC on its balance sheet as of the end of Q2 2020.
The company also noted it had successfully raised C$8.3 million in gross proceeds from its public offering, which closed near the end of the quarter. According to management, the additional capital has already been committed to upgrading its existing mining equipment.
“This upgrade is a big step towards modernizing Hut 8’s equipment and increasing the overall efficiency of its bitcoin mining fleet,” the company said in a statement.
As of press time, Hut 8 shares have declined 2% following the earnings release.
Bitcoin Mining Firm Layer1 Accused of Copyright Infringement
Layer1 — a Bitcoin mining firm backed by PayPal co-founder Peter Thiel — was accused of copyright infringement.
United States-based cloud computing company Lancium LLC has filed a lawsuit against Bitcoin (BTC) mining firm Layer1 for patent infringement in the Western District Court of Texas.
According to a complaint filed on Aug. 14, the power usage model employed by Layer1 for Bitcoin mining violates Lancium LLC’s patent filed in March 2020.
The founder of Lancium LLC, Michael McNamara and Raymond Cline, had reportedly filed the patent after formulating a method to help data centers shut down or start operations depending on the cost of electricity in near real time.
The company claims that its data center power management system allows data centers to be more flexible with their energy consumption and more efficiently handle computing workloads including Bitcoin mining.
Layer1 had purportedly been using the exact same method to operate its Bitcoin mining operations while calling it “its proprietary demand-response software.”
Lancium alleges that Layer1 has violated U.S. patent laws by infringing on multiple parts of Lancium LLC’s patent “by manufacturing, using, offering to sell, selling, and/or importing infringing systems and methods for adjusting power consumption utilized in or by at least Layer1’s Bitcoin mining facilities.”
The firm argued in its statement that Layer1’s alleged transgression had caused “irreplaceable harm” to Lancium LLC. While the value of damages will be determined during trial, the company said the amount “cannot be less than a reasonable royalty” and requested compensation for the same.
Lancium has also requested the court to publish a permanent injunction that could prevent Layer1 or its employees from further violating the company patent.
Layer1 did not immediately respond to Cointelegraph’s request for comment.
Top Bitcoin Mining Pools See 15% Hashrate Drop Amid Continuous Rainstorms In China
Major Chinese bitcoin mining pools are each seeing daily hashrate drops of between 10% and 20% following continuous rainstorms in Sichuan.
China’s southwestern Sichuan province, a mountainous region that is estimated to have over 50% of the Bitcoin network’s total computing power, has been hit by heavy rainstorms since last week, which peaked over the last two days.
The heavy rainstorms have caused electricity outages in parts of the region as hydro-plants stop generating power to help discharge the floods. Some counties are also experiencing telecommunication and internet breakdowns, said Kevin Pan, CEO and co-founder of PoolIn.
As result, impacted bitcoin mining farms in the region are forced to unplug from the network for the time being. It’s not clear when the situation will prove as the rainstorms are still ongoing.
Data from BTC.com shows the world’s top four bitcoin mining pools – PoolIn, F2Pool, BTC.com and Antpool, all based in China – have each seen their hashrates drop between 10% and 20% over the last 24 hours. The computing power connected to these four pools accounts for around 50% of the Bitcoin network’s total.
Pan said in a Weibo post Tuesday China time that in addition to mining farms being forced to unplug due to electricity and internet disruptions, some have also proactively paused operations ahead of time and evacuated their on-site staff for safety precautions.
According to the Xinhua News Agency, the accumulated rain volume in a dozen most-impacted cities in Sichuan between Aug. 10-15 alone has already surpassed the average August monthly volume in any year’s record.
Further, one major highway that leads to Sichuan’s mountain area, where most of the mining farms are located, is shut down due to severe floods and mudslides.
Meanwhile, bitcoin’s last three-day and one-day average hashrate has dropped to around 123 and 110 exahashes per second (EH/s), respectively. These numbers are down over 3% and 10%, respectively, from the seven-day rolling average around 127 EH/s, which is still at an all-time high.
The monsoon season in China every year brings abundant rain and thus excessive hydropower resources especially in the country’s southwestern regions, including Sichuan and Yunan. Such energy excess leads to cheap electricity prices that have been attractive to bitcoin miners.
But over the years, the unpredictable weather also caused floods and mudslides, which resulted in bitcoin mining farms halting operations temporarily or even being completely destroyed.
Marathon Brings New Bitcoin Mining Rigs Online, Sees Itself Becoming Cash-Flow Positive
Nasdaq-listed cryptocurrency mining company Marathon Patent Group received and deployed two shipments of new mining machines, which increased the company’s hashrate by 130 petahash per second to 186 petahash per second.
* According to an announcement Monday, the company received 700 WhatsMiner M31S+ Miners from MicroBT and 600 S19 Pro Antminers from Bitmain.
* 1,000 additional S19 Pro Antminers are expected to arrive between September and December this year leading to an expected additional hashrate increase of 153.4 petahash per second.
* “We believe that the increased hashrate production will mean the company will become cash-flow positive on a go forward basis for the first time since we embarked on this pivot to become a bitcoin mining company,” said CEO Merrick Okamoto.
* Marathon shares, which were already down about 50% from their yearly high set earlier in August, are down 10% from their Monday open, trading around $2.52 at last check.
Nvidia Teases A Massively Improved RTX 3080, But Will It Be Good For Mining?
The performance gains probably won’t be enough to overcome Nvidia’s mining disadvantage.
Nvidia is set to release the next generation of its popular RTX series of graphics cards on Sep. 17. One of these will be the RTX 3080, which comes as the mid-range card among its peers the 3090 and 3070.
However, the performance of the card is set to eclipse the performance of the previous generation’s equivalent, the RTX 2080 Ti. According to Tom’s Hardware, the GPU is promised to be “twice as fast” as the last generation by Nvidia and its raw specifications suggest that the gains could even be higher.
All of this while the price is set to remain the same at $700. The RTX 3090 appears to be a less efficient model in terms of performance to cost ratio, with twice the price but only a 20% performance gain.
But all of these figures apply to gaming, not necessarily mining. AMD has traditionally been dominant in this sector as its cards generally achieve higher hashrates per Watt or unit cost.
The RTX 2080 Ti generally benchmarks lower even compared to its predecessor, the 1080 Ti. Part of this is due to the specific nature of these cards. The RTX series focuses on providing innate ray tracing capabilities, which is very useful for high-end gaming but does nothing for miners.
Philip Salter, head of operations at Genesis Mining, told Cointelegraph what the RTX 3080 could mean for the mining industry:
“What hashrate the 3080 can do remains to be seen. In theory, Ethereum hashrate might be 60%-70% faster, if you look only at memory bandwidth. The advertised 1 TB/s of bandwidth has already been delivered by AMD with the Vega VII, and you can reach 100 MH with that card.”
But he explained that reaching such hashrates requires optimizing the memory timings for Ethereum mining. That can only be done by changing settings in the GPU’s VBIOS, an internal firmware. “Nvidia does not allow you to use custom VBIOS mods however, so you will be stuck with the memory timings that are set by the manufacturer,” Salter added.
Nvidia could release an official VBIOS mod to enhance Ethereum mining, but so far this hasn’t happened.
In addition to the performance issues, the pricing is also likely to be a problem. Nvidia has a “strong position in the gaming market” and the price of its cards generally reflects that, Salter said. The premium for the ray tracing cores also contributes to souring the deal for miners.
“In the end, the 3080 will probably not be able to beat AMDs offering of affordable, tunable GPUs for mining,“ he concluded. However, should the current Ether (ETH) price rally continue, demand for GPUs may become so large that Nvidia cards could suddenly become attractive, similar to how it happened during the 2017 bull market.
‘Exclusive Mining’ Could Have Negative Implications For The Blockchain Industry, Say Experts
A new mining concept is facing criticism in the blockchain sphere.
Dr. Elias Strehle of the Blockchain Research Lab and Lennar Ante of the University of Hamburg recently warned that blockchain nodes engaging in exclusive mining “have no incentive to forward new transactions to their peers.”
They speculated that crypto miners may instead be incentivized to keep transactions confidential “in the hope of being the only one who can earn the associated transaction fees.”
Exclusive mining, which is a type of collusion between a transaction initiator and a single miner or pool, uses private channels to confirm transactions rather than broadcasting them on the public blockchain. It is only after they are recorded in a block that public blockchain that users become aware of such transactions.
The authors alleged that, since transaction costs represent regular income for miners, “significantly increased transaction costs could be used to launder money” by colluding with a miner.
As a result, criminals may see smaller blockchain networks “as more suitable vehicles for money laundering or tax evasion via exclusive mining”, the researchers noted.
Dr. Strehle and Ante identified two other possible motivations for engaging in exclusive mining: reducing transaction cost volatility and hiding unconfirmed transactions from the network to prevent frontrunning.
In June, Cointelegraph reported on a number of mysterious transactions that have stumped the wider community. Some suggest they could be examples of money laundering, or revenge from a disgruntled exchange employee.
DCG’s Foundry To Finance Bitmain Customers In North America
The new partnership targets Bitmain’s end customers.
China’s crypto mining giant Bitmain has entered a new partnership to streamline its operations in North America.
As Bitmain officially announced on Sept. 10, the company has officially partnered with Foundry, a wholly-owned crypto mining subsidiary of major cryptocurrency firm, Digital Currency Group, or DCG. Within the partnership, Foundry will provide financing to Bitmain’s end customers in North America.
According to Bitmain, obtaining financing is more difficult for crypto miners than for firms in other industries. Foundry, in its turn, will help “ship a significant number of machines into North America this year,” according to Su Ke, the global sales and marketing director of Antminer at Bitmain.
The announcement comes shortly after DCG officially introduced Foundry in late August 2020. Formed in 2019, Foundry offers institutional expertise, capital and market intelligence to crypto miners and manufacturers. According to Bitmain, Foundry has emerged as “one of the largest Bitcoin miners in North America” and helped to procure “almost half of the Bitcoin mining” in the region in 2020.
Bitmain has been collaborating with the company “for some time,” a Bitmain representative said. According to the firm, Foundry’s efforts not only “breaks down barriers to entry and growth for mining businesses,” but also “strengthens the overall mining ecosystem.”
This Crypto Mining Operator Was Named Bitmain’s Sole North American Cooperative Repair Center
North America now has its own Bitmain repair center.
Crypto mining operator Core Scientific is set to become the first North American cooperative repair center for major crypto mining hardware manufacturer, Bitmain.
According to an announcement shared with Cointelegraph, the company will offer repair services for Bitmain’s machines. The company says that this will reduce costs associated with shipping hardware to Asia, and curtail the time it takes to fix Bitmain’s proprietary hardware.
Core Scientific will also be able to perform repairs on out-of-warranty machines, with engineers certified by the Bitmain’s Ant Training Academy.
Speaking with Cointelegraph, Taras Kulyk, Core Scientific’s Senior VP of Blockchain Development, highlighted China as the dominant jurisdiction within the digital mining sector. He also noted that the country is currently the global leader in terms of Bitcoin’s (BTC) hashrate.
He acknowledged, however, that global hashrate diversification has increased in recent months as other countries (the U.S. in particular) vie for their place in the digital mining industry:
“This growth in demand has massively increased the strain on the repair services needed to maintain the fleet within the US and Canada. Importantly, being selected as the cooperative repair center for Bitmain will allow our customers, as well as other Bitmain product users, within North America to materially reduce downtime and the costs involved in repairing their bitmain hardware.”
Russell Cann, Core Scientific’s Chief Customer Success Officer, spoke with Cointelegraph on the benefits of a North American repair center:
“At a minimum, the Core Scientific warranty repair center will save customers the international shipping cost of units going to Hong Kong. More importantly, the customer downtime of a unit in-warranty repair will be significantly shortened by having a large US operator handle warranty repair. Current shipping savings is estimated to be as much as US$100/unit and having a repair center within North America should cut the repair time by as much as two weeks.”
Over the past year, the crypto mining industry in the United States has witnessed an uptick in activity, with Bitcoin’s hash rate increasing by 78% between September 2019 and April 2020.
Profit Taking Bitcoin Miners Won’t Stop The Next Bull Run: On-Chain Analyst
Bitcoin miners sold substantial amounts of BTC throughout the past two months, but on-chain analysts believe it won’t stop the next bull run.
Historical data shows that some miners began to sell Bitcoin (BTC) at the end of July, leading to increased selling pressure in the cryptocurrency market.
Eventually, the dominant cryptocurrency fell steeply from mid-August, recording a 13% fall and since then BTC has struggled to retake the $12K mark.
According to CryptoQuant CEO Ki Young Ju, continued selling by miners might not be enough to prevent a bull run. On-chain data analysis firms closely observe the movements of miners and whales because they hold significant amounts of BTC.
Willy Woo, an on-chain analyst, explained that miners represent one of the two external sources of selling pressure for Bitcoin. He previously said:
“There’s only two unmatched sell pressures on the market. (1) Miners who dilute the supply and sell onto the market, this is the hidden tax via monetary inflation. And (2) the exchanges who tax the traders and sell onto the market.”
When miners start selling their Bitcoin holdings, typically to cover expenses, it could trigger a correction in the cryptocurrency market.
For instance, From Aug. 17 to Sept. 5, the price of Bitcoin dropped from $12,486 to $9,813. During that time, several whales sold Bitcoin right at $12,000 and the same behaviour was observed amongst miners.
The selling pressure coming from miners and whales noticeably has been attributed to the current crypto market slump but in the longer term, Ki explained it is not enough to stop a prolonged bull run.
If miners abruptly sell a significant amount of BTC, it could cause a severe correction as a small price movement could trigger liquidations from heavily-leveraged traders. Hence, even a relatively small sell-off by miners could theoretically cause massive price swings.
Ki says the intensity of the sell-off from miners was not strong enough to halt future bull runs. He said:
“Miner Update: Some miners began selling at the end of July, but I think in the long-run, miners didn’t sell BTC large enough to stop the next bull-run.”
According to ByteTree, the net inventory of Bitcoin miners declined by 125 BTC per week in the last 12 weeks. The data indicates that miners sold approximately $1.362 million BTC per week week atop the BTC that they mined and sold.
As Ki emphasized, the data shows that miners sold substantial amounts of BTC, but not in amounts that were irregular to normal behaviour.
Post-Halving Bull Cycle Remains A Possibility
Bitcoin is still hovering above the critical $10,000 technical support level despite multiple attempts by bears to drop the price below the key level.
The resilience of Bitcoin amidst a heightened level of selling pressure suggests a cautiously bullish trend in the long term.
Several on-chain metrics also indicate that now is a healthy accumulation phase for Bitcoin. Rafael Schultze-Kraft, the CTO at Glassnode, said:
“Short-Term Holder Net Unrealized Profit/Loss (STH-NUPL) with a #bullish signal here imo. That bounce of the 0-line was important, is very characteristic for previous bull markets, and historically a good buying opportunity.”
Crypto Mining Activities Are Now Regulated By The Venezuelan Gov
But there is always a catch when it comes to Maduro’s government.
Venezuela’s National Superintendency of Crypto Assets and Related Activities, or SUNACRIP, has issued the first decree to officially regulate all crypto mining activities. In order to qualify, miners will need to meet specific requirements.
An official announcement was first published in the Gaceta Oficial and signed by the head of the SUNACRIP, Joselit Ramirez. It stated that residents in Venezuela who are interested in mining Bitcoin (BTC) and other cryptocurrencies must request a license and join the so-called “national pool.”
The legal framework asks people to disclose what kind of activities they would like to do in crypto mining, such as trading, importing, or using mining equipment. The government will also issue a special license for those who want to manufacture ASIC mining hardware or build mining farms.
About The “National Pool,” The SUNACRIP Defined It As Follows:
“A group of pooled miners agreeing to share block earnings in proportion to the contributed mining hash power. They share a similar operation to cooperatives, and it would be in charge of the National Superintendency of Crypto Assets and Related Activities (SUNACRIP).”
The decree also states that the SUNACRIP “may” offer benefits, incentives, and even “tax exemptions to encourage miners to join the national pool.” However, if Venezuelan crypto miners don’t join the national pool, they’ll be subject to the Comprehensive Crypto Assets System’s sanctions.
The new regulation doesn’t clarify if the government has the legal authority to freeze crypto mined within the national pool, or what type of sanctions will be imposed on people who mine outside such a public pool.
Crypto miners should apply for the licenses through the Comprehensive Registry of Services in Cryptoassets, or RISEC, a system run by the SUNACRIP.
Although Venezuela is known for having a highly active crypto mining population, the government has not always favored such activities.
Venezuelan Minister of Habitat and Housing, Ildemaro Villarroel, recently announced that crypto mining operations would not be allowed in any state-owned housing or neighborhoods that are part of the “Gran Misión Vivienda” project (Great Home Mission).
Preliminary Tests Suggest Nvidia RTX 3000 Series May Take AMD’s Mining Crown
The RTX 3080 is apparently twice as fast as the previous generation.
The newly released generation of Nvidia graphics cards, the RTX 3000 series, is generating some buzz among miners as it is expected to be a vast improvement over the previous generations.
While the cards were initially speculated to be only a minor upgrade, new information seems to confirm that they could reach hash rates of around 100 Megahashes per second for Ethereum and Ethash mining.
This would be more than a two-fold improvement over many of the top-of-the-line cards offered on the market today by both Nvidia and AMD. According to mining calculator Whattomine, the AMD RX Vega series, 5700 series and Nvidia’s previous RTX 2000 series all range between 40 and 50 MH/s with light optimizations.
Preliminary tests circulating in the community firmly place the RTX 3080 and 3090 — the mid to high range cards — between 90 MH/s and 115 MH/s depending on the GPU and the optimizations.
Kristy-Leigh Minehan, former chief technology officer of Core Scientific and Genesis Mining, said that these results are to be expected given the cards’ memory bandwidth. According to her, the “rule of thumb” is that the Ethereum hash rate is 10% of the memory bandwidth in Gigabytes per second. Leaked specifications suggest that the RTX 3080 ranges between 700 GB/s and 900 GB/s, while the RTX 3090 can reach more than 1000 GB/s.
Minehan also highlighted that while flashing the bios is impossible on Nvidia, optimizing the memory timings for Ethereum can be done on-the-fly with software, eliminating AMD’s purported competitive advantage. In a conversation with Cointelegraph, she claimed that the RTX 3000 series will be “beyond better than AMD.”
It is worth making a direct comparison between the RTX 3080 and its closest competitor from AMD, the Radeon 5700 XT. The 3080 can be obtained for around $600 to $700, while the 5700 XT sells for about $400. The AMD hashes at around 51 MH/s, while the Nvidia card is expected to reach at least 90 MH/s.
However, the Nvidia is hungrier than the AMD, having a thermal design power — an industry measure for maximum energy consumption — of 320 Watts. The card from AMD clocks in at 225 Watts. Nevertheless, the higher hashing rate more than makes up for this difference in energy efficiency. It is also worth noting that these figures are unlikely to be entirely accurate for actual mining usage.
While many miners located in regions with expensive electricity will often look only at energy efficiency, professional miners will also heavily focus on the unit price. “All three are important,” Minehan said referring to hash rate, price and energy usage.
From that point of view, the 5700 XT’s price-to-hash rate ratio is almost equal to that of the Nvidia. This measure would also immediately disqualify the beefier RTX 3090, which comes at a $1,500 price tag for a modest 10-15% hashing improvement over its smaller brother.
In summary, Nvidia’s new RTX 3000 series appears to be quite competitive with AMD in the field of Ethereum mining, in contrast to previous generations. The RTX 2000 series and, to a lesser extent, the GTX 1000 series were generally more expensive than AMD while featuring equal or lower hash rates.
The Top Crypto-Mining Graphics Cards To Get A Big Bang For Your Buck
Cryptocurrency miners are back in business, but which graphics card should you choose to not be left with an empty wallet?
Now that we are at the tail end of 2020, the big hardware manufacturers are starting to announce their latest, fastest offerings set to be released ahead of the holiday season. Meanwhile, the cryptocurrency mining market continues to expand rapidly against all odds. Here’s an overview of which producers offer the best graphics cards in the market and which cards suit specific types of mining.
Bitcoin or Ether?
In terms of choosing a cryptocurrency to mine in 2020, there have been no significant changes. This year, most video cards continue to be able to mine Ether (ETH) or its forks. As for Bitcoin (BTC), mining of the world’s first cryptocurrency stopped being available to ordinary people a few years ago, as it requires serious investments, special equipment and access to large amounts of cheap electricity.
This is even more so the case now, as BTC mining is bringing in half the income after the reward halving took place in May. The difficulty of mining continues to increase, and in September, it updated to an all-time high of 19.31 trillion at block 649,152.
As a result, many popular devices such as the Antminer S9 have become obsolete. After the halving, the most profitable miners became the Whatsminer M30S ++ from the Chinese company MicroBT, which can deliver a hash rate of up to 112 terahashes per second and bring in just over $8.50 per day in profit, and Bitmain’s Antminer S19 Pro, which can reach a hash rate of 110 TH/s and see a daily profit of just under $8.50. But the prices of these miners are rather steep: A Whatsminer M30S++ costs $1,800, and the Antminer S19 Pro comes in at $2,407.
When it comes to Ether and its forks, graphics-card mining is once again becoming popular for several reasons. First, over the past two years, Ethereum’s hash rate has decreased by 15% (when compared with August 2018), now sitting at 256.221 TH/s. This means that Ether is now easier to mine.
Second, both modern and old models of cards can still be used for mining. For example, the Nvidia 1050 Ti, released in October 2016, and the Radeon RX 580, released in April 2017, are still very popular. Prices for such old cards are constantly decreasing as newer cards come out, which is encouraging miners to return to the market. But most importantly, the price of ETH tripled from the start of 2020 to the beginning of September, making Ether still very profitable to mine.
There is another factor that attracts the interest of miners: the upcoming transition to Ethereum 2.0 and a proof-of-stake algorithm, which is expected to commence before the end of the year. A spokesperson from WhatToMine, a popular web-based calculator for evaluating the profitability of mining cryptocurrencies, told Cointelegraph that Ether will continue to be in demand, not only this year but also in 2021:
“This cycle we can expect further expansion of DeFi projects, which will in turn make ETH network more and more popular. As a result block reward for ETH (the fee part) should increase in cycles with general uptrend, making ETH mining the most profitable for GPU miners.”
What To Buy?
At the beginning of the year, Cointelegraph reviewed the graphics cards of the two largest manufacturers, Nvidia and AMD, and Nvidia cards seemed to have an upper hand in mining. However, taking into account the fact that Ether mining has gained a second life, AMD cards should not be written off, as the company’s Vega and RX generations are still very suitable for Ethash algorithms.
Regardless of the manufacturer, the most important factor is return on investment, as any miner must first invest a decent amount of money before turning any profit. A standard rig requires six graphics cards, and as a result, a miner can spend over $9,000 if buying the popular Nvidia RTX 2080 Ti with 8 GB or 11 GB of RAM memory. But what about those who can’t afford the top shelf but still want to make a profit? Here are the most popular graphics cards right now for Ether mining that cost under $400.
Nvidia GTX 1660 Super
This card was released in October 2019, meaning the tech is still fresh. The graphics card has 6 GB of memory and Turing architecture, which executes more clock frequency, uses less power and has 20% better performance than the GTX 1660. The price of this model ranges from $240 to $250.
AMD Radeon RX 5700 and RX 5700 XT
In summer 2019, AMD introduced a new line of RX 5700-series graphics cards to the market. These cards use fin field-effect transistor, or FinFET, technology, which results in better energy efficiency when mining due to the reduced size of electronic components and lower current consumption.
The specifications of the RX 5700 include 8 GB of GDDR6 memory and a power consumption of 180 watts. The RX 5700 XT has a power consumption of 225 W, but the base frequency is also 10% higher than in the RX 5700 model. These cards are slightly more expensive, costing around $430, but can be snatched up with a discount at around $400.
Nvidia RTX 2060 Super
The RTX 2060 Super card may not be an obvious choice, as apart from having 8 GB of memory, it is no different from the RTX 2060. But at the same time, it uses five different algorithms — GrinCuckarooD29, GrinCuckatoo31, DaggerHashimoto, X16Rv2 and BeamV2 — which makes it more stable, safe and suitable for mining.
In fact, this is an intermediate option between the RTX 2060 and the RTX 2070, but it can be found online for just $399, while the RTX 2070 will cost you around $530 — and a $130 difference is a lot of money in this business.
AMD Radeon RX 580
AMD’s RX 580 was released back in 2017 and is still one of the best low-budget GPUs for mining, with a price ranging between around $180 and $230. The card is used mainly for mining Ether and has 8 GB of memory, but it consumes little power at just 150 W. The only potential competitor might be the RX 570, but those card with only 4 GB of memory will no longer be able to mine Ether in 2021.
Nvidia has a dedicated series of graphics cards for crypto mining. The Nvidia P106-100 “mining edition” is based on the Nvidia GP106 GPU (Geforce GTX 1060), which is almost the same as a regular Geforce GTX 1060 but with some slight modifications. The P106-100 has no video outputs and no rear panel, and the card is equipped with 6 GB of memory.
The “mining edition” in the name does not mean that the new product is better at mining than the usual version but rather that it’s designed specifically for miners, as everything considered nonessential has been removed, allowing it to be sold for around $320, a whole $170 cheaper than a GTX 1060 unit.
So, Which One Is Best To Buy?
How long will it take for these budget cards to recoup their initial price? For comparison, one of the most popular cards for mining today, the Nvidia RTX 2080 Ti, brings in around $1.66 per day when mining Ether. If purchased for an average price of around $1,400, this graphics card will take about 28 months to pay for itself, without taking into account the cost of electricity.
So, here is what the calculations say: The Nvidia GTX 1660 Super, which can be bought for $240, would bring $0.65 per day and take 12 months to pay for itself. The AMD Radeon RX 5700 XT costs $400 and would have an 8.5-month payback time while bringing in $1.56 per day.
The Nvidia RTX 2060 Super can be bought for $399 and will bring $0.92 per day when mining Ether. This card will pay off in 14 months. The Radeon RX 580 is a very popular card due to its rather low price of around $200, and this card will recoup in just seven months, bringing in almost a dollar ($0.96) per day. Created specifically for mining, the Nvidia P106-100 will bring $0.85 per day and, at a cost of $320, will pay off in just over 12 months.
However, this is not an exact science, and every miner should keep in mind that the algorithms of any crypto are constantly becoming more complex, which makes it harder to mine and longer to recoup their investment into their mining equipment.
New Cards Right Now?
Given the excitement around decentralized finance, a crypto boom looms on the horizon once again, and the upcoming new products may take it further. In September, Nvidia released its new generation of GeForce RTX 3000 graphics cards, with some people already saying that it can produce 81–89 MH/s during Ether mining. And the upper-class model, the GeForce RTX 3090, is expected to demonstrate 120–122 Mh/s. If so, then Nvidia may face a shortage of cards, as miners will buy everything, leaving gamers with nothing.
But AMD is not lagging behind and will present its Radeon RDNA 2 line at the end of October, which will directly compete with the 3000 series from Nvidia. The emergence of new cards will be of great interest to the crypto mining community. Andrej Škraba, head of marketing at NiceHash — a crypto mining and trading platform — is confident that the technological innovations of AMD and Nvidia will bring higher productivity:
“Nvidia just launched 3000 series, but current availability is super low. New RTX cards will bring higher hash-rates and miners will be upgrading their used 1060s and old AMD cards (480s/580s). We still have to wait for the AMD announcement to see what they will bring to the market.”
Fidelity, Vanguard, Schwab Funds Have Been Loading Up on Crypto Mining Stocks
Three of the largest asset managers are diversifying their funds to hold blockchain stocks, throwing more establishment financial might behind bitcoin’s technology.
Charles Schwab has begun purchasing shares of Riot Blockchain, joining Fidelity and Vanguard – already investors in Riot, HIVE Blockchain Technologies, Hut 8 and BC Group – in allocating mutual fund holdings to a cryptocurrency company, according to financial filings with the U.S. Securities and Exchange Commission.
The stock purchases also double down on the mutual fund managers’ equity investments and experiments in the space. Schwab this summer invested in Alchemy, an Ethereum application platform, while Vanguard has been piloting Symbiont’s blockchain for foreign exchange transactions, and Fidelity has a digital assets arm – set to launch a trading service and a bitcoin index fund – and has backed Coin Metrics, Fireblocks and Everledger.
Filings for the first half of this year show Charles Schwab Investment Management, Inc. purchased 22,977 Riot shares for $52,000. Two Vanguard funds – the Vanguard Index Fund and Vanguard Valley Forge Index Fund – were invested in 954,229 Riot shares worth $2,118,000, and two Fidelity funds were separately invested in 176,242 Riot shares worth $230,115 (split between a NASDAQ index and three market indices) and 2,769,759 HIVE shares worth $1,003,163.
Riot Blockchain, based in the U.S., and HIVE Blockchain Technologies, based in Canada, provide services for mining bitcoin, a process where new cryptocurrency is minted.
Outside the U.S., a third Fidelity fund – Fidelity International – first acquired this year 10,451,094 shares valued at $1.80 each of Hut 8, a Canadian bitcoin mining company, and 17 million shares priced at HK$6.50 (US$8.30) of BC Group, a Hong Kong-based digital asset platform, earlier filings indicate.
The Riot shares in the two Vanguard funds and a third Vanguard fund – the Vanguard Institutional Index Fund – are back up from the last three years, which ended with them holding a combined 269,610 shares for $7,912,000 in 2017, 187,049 shares for $282,000 in 2018 and 826,391 shares for $925,000 in 2019.
Holdings also ticked up again for the Fidelity fund invested in Riot – the Fidelity Concord Street Trust – which bought 188,277 shares for $1,185,607 ending in 2018 and 159,263 shares for $270,375 ending in 2019. They dipped for the Fidelity Securities Fund invested in HIVE, with 5,792,880 shares for $82,433,000 ending in 2017, 4,972,700 shares for $821,000 ending in 2018 and 2,784,259 shares for $367,980 ending in 2019.
The Blackstone Group’s Alternative Investment Funds were also holding Riot Blockchain stock last year, but stopped including it in their portfolios.
The First-Ever Mining Hardware Marketplace Just Launched
This company presents an alternative to “sketchy” Telegram channels for second-hand mining equipment.
Asic Jungle has launched a beta version of what it calls “the first-ever mining hardware marketplace” for cryptocurrency mining hardware. The company’s CEO Artem Bespaloff told Cointelegraph that he has created a trusted platform for second-hand mining equipment that operates without any middlemen:
“[It’s] the first and only online marketplace where buyers can interact directly with sellers through the platform and not have to use any brokerage services or Telegram channels (I call them ‘sketchy’ Telegram channels) because all sorts of things go on there. And we decided to create this ecosystem where buyers and sellers deal together between themselves.”
The company’s solution to these problems is a two-sided marketplace that connects ASIC buyers and sellers in a secure and transparent environment. According to Bespaloff, ASIC brokers currently charge high premiums that are taking advantage of the market’s lack of price discovery mechanisms. He believes that these brokers create information asymmetry by withholding pertinent information.
Bespaloff said that Asic Jungle upholds a number of security features to ensure that transactions happen in a trusted environment, including an emphasis on AML compliance. As the Canada-based company will be serving customers from all over the world, they intend to comply with both local laws and regulations and the compliance laws of the United States.
Although mining equipment becomes progressively less efficient with the passage of time, Bespaloff assured that there is plenty of demand for second-hand equipment in places with very cheap or free energy sources, like some areas in Canada and Venezuela — though the residents of the latter may be excluded from participation in an effort to comply with U.S. sanctions.
Both Bitcoin and Ethereum (ETH) have recently experienced record-setting hashrate increases, indicating there will be no lack of interest in mining equipment in the near future.
This New Service Plays Matchmaker Between Solo Miners, Big Mining Farms
A first-of-its kind service wants to play matchmaker between big-scale mining facilities and individual miners looking for a hosting setup.
Bitcoin mining company HASHR8 just launched its Compass platform, a search engine of sorts for individual miners to shop for a hosting facility to operate their mining hardware for them. While mining farms hosting solo miners’ machines is nothing new, Compass is the first service to create a product to sync miners with hosting providers.
The initiative was born from a drive to keep Bitcoin’s hashrate distributed, and that starts with making sure the smaller-time miners can stay competitive.
Marathon Purchases Additional 10,000 S-19 Pro Miners From Bitmain
Nasdaq-listed bitcoin mining company Marathon Patent Group signed a contact to purchase an additional 10,000 Antminer S-19 Pro miners from Bitmain, according to a Monday press release.
* The machines, when delivered and fully installed, will add 1.10 exahash to the company’s existing mining power.
* Delivery of Marathon’s new machines is expected to begin in January 2021 with all miners fully deployed by the end of Q1 2021, according to CEO Merrick Okamoto.
* This latest contract marks the continued rapid expansion of Marathon’s mining power after signing another $23 million deal with Bitmain for 10,500 additional miners in August, as CoinDesk reported.
* The Las Vegas-based company also formed a joint venture early this month with Maryland-based Beowulf Energy to supply power to Marathon’s miners at a rate 38% lower than its current costs.
Bitcoin Mining Firm Hut 8 Appoints Jaime Leverton As CEO
Publicly traded mining company Hut 8 announced Jaime Leverton as its new CEO Monday, set to replace interim CEO Jimmy Vaiopoulos on Dec. 1.
Former CEO Andrew Kiguel stepped down in late April and then-CFO Vaiopoulos was elevated on a temporary basis while the company’s board of directors searched for a permanent replacement. With Leverton’s appointment, Vaiopoulos will return to his prior role for the Toronto-based company.
Leverton is joining Hut 8 from her current position at eStruxture Data Centers, where she’s chief commercial officer. From Leverton’s LinkedIn profile, it appears her role at Hut 8 will be her first position in the cryptocurrency industry.
On-chain Metrics Indicate Bitcoin Miners’ Influence On The Price Is Diminishing
Research suggests that Bitcoin miners are holding less of the asset.
A new report by on-chain analytics provider CoinMetrics suggests that miners’ considerable influence on the Bitcoin network is slowly diminishing.
The research analyzed miner and pool addresses and spending in order to determine whether their influence over the network as a whole had changed over time. As miners receive newly issued Bitcoin rather than buy it, they are natural net sellers of the asset.
Measuring the net flows from two types of addresses associated with block rewards revealed that there has been a gradual reduction in miners’ effect on liquidity:
“On-chain metrics like miners’ holdings and net transfer volumes indicate that miners’ influence on the network is slowly waning.”
Operating costs such as power and rent are fiat-denominated which adds pressure to sell BTC for fiat. The research found that the percentage of the supply held by miners has generally decreased over time.
The addresses that receive the block reward, and the ones that receive immediate transactions from them, have both seen a decline in the number of coins held.
When viewed in the context of total supply, the gradual reduction in supply held by miners and pools is even clearer. That said, the report confirmed that miners and pools still control a “substantial chunk” of the total supply.
Miners, especially those active in the network’s early days, control a significant amount of BTC.
But the number of coins held by miners has generally declined throughout the network’s history.
— CoinMetrics.io (@coinmetrics) November 3, 2020
The percentage of total supply held by pool and miner addresses has declined from around 25% in 2015 to approximately 18% today according to the chart. Lower holdings means that miners have less BTC to dump on markets which diminishes their impact on prices.
Net flows were volatile in the network’s early days as the amount sold varied wildly, along with prices. However, volatility has gradually decreased over time, likely due to halving events and reductions in block rewards.
“These flows have also experienced a gradual dampening in volatility, indicating a gradual reduction in miners’ effect on liquidity.”
Several other on-chain metrics have also been in decline recently such as hashrate, which has dropped due to seasonal changes in China where most of the mining is conducted. The recent difficulty adjustment has also been noted as its largest single downward adjustment during the ASIC era according to CoinMetrics.
Crypto Mining Is Now Drawing In The World’s Top Renewables Producers
At what point will greening crypto energy consumption be enough?
En+ Group, the world’s top producer of low-carbon aluminum and the largest private-sector generator of hydropower, has entered its first crypto mining joint venture.
The new venture, called Bit+, will focus on creating facilities that support crypto mining with a low carbon footprint. En+ Group’s partner in Bit+ is the Russian company BitRiver, which provides hosting services and turnkey solutions for large-scale, institutional crypto mining operations.
BitRiver currently operates the largest data center offering colocation services for Bitcoin (BTC) mining in the Russian Federation and offers similar services across the country and to CIS neighbors.
The first result of the Bit+ venture is the installation of a new facility close to BitRiver’s existing data center in Bratsk, located in the Irkutsk region of the Russian Federation. En+ Group has committed 10MW of electricity to the facility, which is composed of modular crypto mining units and is already operational. The companies have plans to scale the facility’s capacity to roughly 40MW.
For its initial phase, the facility is composed of 14 modular units, each of which is a converted shipping container that is as large as a full-scale crypto mining data center. Each unit can accommodate up to 400 of Bitmain’s S19 Pro miners.
In an official statement, En+ Group provided some context regarding the choice of the Irkutsk region and its apparent viability for lower-carbon solutions to cryptocurrency mining:
“Our energy assets in the [Irkutsk] region produce low-carbon, inexpensive electricity from renewable sources, and we are able to offer surplus energy to these partnerships. Moreover, the low average annual temperature reduces the energy required by the datacentres, making them more efficient and further minimising their carbon footprint.”
As reported, high energy consumption remains an Achilles’ heel for the crypto sector, particularly for coins such as Bitcoin, whose consensus algorithm is computationally intensive and thus demands exceptionally high levels of energy to maintain.
Several energy experts have attempted to reorient the energy debate surrounding Bitcoin away from energy consumption. They have instead focused on analyzing where that energy is produced and how it is generated, and have argued that it is most important to ensure that less harmful choices are made at the power generation stage.
With financial and geopolitical actors now entering the endgame of global climate politics, it remains to be seen how far greening crypto’s energy consumption, instead of aiming to reduce it, will be enough to make the sector truly sustainable.
Bitcoin Miner Revenue Surges To Pre-Halving Levels
Miners are likely starting to sell some BTC at this point.
As the Bitcoin (BTC) price is reaching its highest levels since January 2018, Bitcoin mining is getting more profitable due to a number of factors.
According to data from Blockchain.com, BTC miner revenue has soared to levels not seen since Bitcoin’s third halving in May 2020, which reduced the miner block reward from 12.5 BTC to 6.25 BTC.
As such, BTC miners’ revenue hit $20.8 million on Nov. 4. According to Blockchain.com, this is the highest point recorded since September 2019, when the miners’ block reward was twice as much as now.
A spike in BTC miner revenue levels is coming from the Bitcoin price doubling since May’s halving. On Nov. 4, the price reached a new 2020 high at $15,950, jumping more than 20% over the past seven days.
The jump is also due to the simultaneous rise in Bitcoin transaction fees. As reported by Cointelegraph, Bitcoin transaction fees surged by nearly 200% in late October. As such, the percentage of BTC miner revenue from fees has significantly increased, accounting for $4.15 million or roughly 20% of total miner revenue.
Amid parabolic growth in revenue, some miners are likely to start cashing out at this point.
According to analysts at CryptoQuant, some miners may be compelled to start selling BTC since the Miner’s Position Index is currently at around 4. Values above 2 indicate that most miners are selling.
Additionally, there is also a noticeable spike in transactions from miners to exchanges as the price crossed above $15,000. However, the amount is still relatively small compared to pre-halving outflow levels.
“Insurance,” CryptoQuant CEO Ki Young Ju, commented on the spike in outflows, suggesting that while miners are being cautious, most are still likely anticipating the price of Bitcoin to go higher.
Big Mining Move: Bitcoin’s Hash Power Increases 42% In Two Days
It appears many Chinese miners have completed their annual migration from Sichuan, with Bitcoin’s hash rate spiking more than 40% in two days.
The hash power of the Bitcoin (BTC) network has jumped by roughly 30% over the past 24 hours, which, if sustained, suggests a major difficulty adjustment may soon be incoming.
According to Coinwarz, Bitcoin’s hash rate currently sits at 157.5 exahashes per second, or EH/s, after briefly pushing above 160 EH/s. As of this writing, BTC hash power has increased by 42% in two days.
The spike follows a sharp decline in hash power in late October, which many analysts attributed to the end of the rainy season in the Chinese mining hub of Sichuan.
The province’s abundant and cheap hydroelectric power is estimated to attract around 80% of Chinese miners during the wet season. In December, CoinShares estimated that Sichuan accounted for 54% of global mining activity.
Quantum Economics analyst Jason Deane speculated that the sudden increase in Bitcoin hash power could be a sign that many Chinese miners have completed their migration from Sichuan and restored operations in other local mining hubs such as Xinjian and Inner Mongolia.
Whoa! big jump in #bitcoin hash rate over last 10 hours (+29.7% trough to peak) Large number of machines just came online somewhere, relocated Sichuan region miners possibly? pic.twitter.com/UKahgQ37Tm
— Jason Deane (@JasonADeane) November 9, 2020
The sudden spike in mining activity suggests the network is likely to produce another significant difficulty adjustment.
A major upward adjustment would come at the chagrin of non-Chinese miners who have been enjoying boosted profits after October’s apparent migration from Sichuan resulted in a 16% negative difficulty adjustment — the second-largest downwards adjustment in Bitcoin’s history.
Earlier this week, the world’s largest generator of hydroelectric power for the private-sector, Russian firm En+ Group, announced it would be launching a cryptocurrency mining venture in partnership with local company BitRiver.
Binance Launches Ethereum Mining Pool With 0.5% Fees
Binance users can now sign up to mine Ether as well as Bitcoin via the exchange’s mining pool.
After launching its Bitcoin (BTC) mining pool in April, crypto exchange Binance has now launched an in-house mining pool for the market’s largest altcoin by market cap, Ether (ETH).
For the first month, between Nov. 12 and Dec. 12, Binance is trying to attract miners by offering a zero-fee regime. After that, those contributing their hashin power to the pool will be charged a competitive 0.5% commission on their earnings.
Binance’s instructions for setting up a mining pool account note that participants will need to use a Windows or Linux operating system, GPU (NVIDIA or AMD graphics card memory of 4G minimum), 5GB virtual memory for each GPU, and mining software such as HiveOS or Easy Miner.
The Ethereum mining pool will use a similar system to the existing Bitcoin pool, called FPPS, or Full Pay Per Share. Binance’s Bitcoin pool notably also offers a feature called smart pool, which enables participants to automatically switch hash rates in order to mine the most profitable of three supported coins based on the SHA- 256 algorithm: Bitcoin (BTC), Bitcoin Cash (BCH) or Bitcoin SV (BSV). The settlement is still paid out in BTC.
An online pool distribution tracker for Bitcoin mining pools, BTC.com, indicates that Binance Pool accounted for 9.4% of Bitcoin’s total hash rate over the past week.
Centralization looks set to remain a concern for those committed to the founding decentralizing ethos of cryptocurrency. BTC.com’s data shows that over 50% of Bitcoin’s current hash rate is accounted for by four mining pools: F2Pool (18.5%), Poolin (12.2%), BTC.com (11.6%) and AntPool (11.5%).
The Rise Of Major Bitcoin Mining Institutions Is Inevitable
2020 marks a new era for mining institutionalization, bringing with it both benefits and challenges.
There are very few investments that can deliver an infrastructure-style downside case with a venture-capital-style upside. The combination of energy arbitrage with accumulating a balance sheet of Bitcoin (BTC) can deliver this.
That is why we are seeing a rush of institutions pouring into the Bitcoin mining space and starting to build out megafacilities.
Securing New-Generation Hardware
At its peak performance in 2018, Bitmain was able to produce over 95,000 rigs per week. However, since that point, production levels have come down, a partial result of its ongoing legal battle. In the other corner, MicroBT is set to deliver 1.3 million machines this year, adding 25,000 rigs per week to the mix.
The West only receives a finite allocation of these new machines, and with 17 publicly listed mining companies and ASIC financiers and large co-locations announcing purchases weekly, you can see how that fresh supply of equipment quickly dries up.
Building relationships with the manufacturers is now crucial to securing an ample allocation of new machines. How do you get in this queue? Have a big checkbook.
Reducing Capital Expenditure
Economies of scale stand in contrast to decentralization. Yet, like most other industries, the mining space rewards size. Large mining companies receive discounts on ASIC retail prices. With an average payback period of around 300 days for new-generation equipment, the discount can reduce it by over a month.
Large miners also have to put up less down payment, in some cases around 20% compared with over 50% for retail. This allows miners to acquire more machines and build out faster.
On the infrastructure side, in most cases, building out a 30-megawatt farm can be done at a much lower cost per MW than a 3 MW facility.
Maximining Operating Profits
If you want cheap power, it’s going to cost a great deal of capital for things like buying the land, building out large infrastructure, acquiring generators and other equipment, funding performance bonds, etc. While there are miners taking advantage of small sources of cheap power, in large, the most profitable miners are the big ones.
They are able to put up the necessary capital to secure the best locations. And as we know, the cost of electricity is one of the significant determinants of success.
Beyond sourcing cheap electricity, large miners can negotiate lower pool fees, firmware development fees and ASIC management software. They can reduce the amount of labor required per MW, drive efficiencies in their management, and improve their power usage effectiveness.
Access To Superior Funding Mechanisms
Mining is a capital-intensive business. It requires consistent equipment upgrades and new purchases. Filing out a 10 MW farm with new-generation equipment can cost nearly $10 million, depending on the purchase price.
Access to various forms of funding such as debt, equity, equipment financing and ASIC financing is crucial for mining farms to stay large and enjoy the benefits discussed above.
From 2018 to 2019, most of these mining operations were funded through a mixture of traditional company-level debt and equity. In 2020, we have seen an explosion of growth in ASIC financing.
Large and reputable mining farms are now able to raise money from financiers while using their purchased ASICs as collateral. There are still a limited number of these financiers, so they prioritize the best, lowest-risk operators to loan money to.
Manufacturers Putting On A Tie
One of the first questions boards ask when presented with an opportunity to mine is around the equipment: “Where is the equipment from?
Who is the manufacturer? Is there a warranty? What’s the pricing? Why is the price changing every day? When do the machines ship?”
Manufacturers like Bitmian are the pioneers of the Wild West mining industry. In 2016, the arms race for who could get the most machines to market began. Left behind were the corporate policies, the details on shipping and pricing, warranties, viable repair centers, and transparency.
When institutions came into the industry, the manufacturers’ mentality of production first and everything else later started to shift.
Now, manufacturers must hold weekly calls with big clients, discussing their production visibility and offering more transparency in their operations. Most of the manufacturers now offer machine warranties, they have opened repair centers, and they try to be more transparent on shipping and pricing — although they have a long way to go.
This trend of professionalization will likely continue with MicroBT, Bitmain and whoever else wants to compete in the West.
Mining Pools Falling In Line
“How do we get actually paid?” is another typical question an institution will ask. The answer is by a mining pool. Mining pools are the buyers of hash rate. So, questions arise on who this counterparty is and what the risks associated with dealing with them are.
Pools have historically been a black box in the mining value chain. Institutions have helped bring more transparency to mining pool pricing, reduced the number of pools that steal from the miners, and incentivized pools to build out new feature sets.
The mining pool industry is evolving rapidly, and if companies don’t keep up, they will get left behind. All of these trends will benefit institutions that are demanding better, more compliant counterparties to deal with.
A wave of consolidation is on the horizon for the mining industry. There are hundreds of great companies and teams fighting for elbow room, primed to be scooped up by institutions.
The main consolidation will happen at the mining farm level. These mergers and acquisitions will most likely be on a project basis rather than a corporate level, similar to the real estate industry.
Other verticals such as mining pools, container manufacturers, ASIC management software, mining media, firmware developers and ASIC resellers may also be consolidated into broader offerings.
Financial services companies will also be natural acquirers as they look to build an ecosystem that spans both the mining and financial value chain.
Financialization Of Hash Rate
In every traditional commodity industry, companies have the ability to leverage financial instruments to hedge their cash flows through futures and options, sell forward some of their production in purchase agreements or forwards, leverage up their bet, and more.
To date, there are very few hash-rate-based financial instruments. The entry of institutions will change this, as they are creating demand for these types of products. The need from miners must be met by other market participants such as traders to form liquid, robust marketplaces.
Five-Year Mining Outlook
In 2015, if you had told the miners where we would be today, they wouldn’t have believed you: millions of ASICs securing the network, gigawatts of power being used and institutions such as Fidelity with their own mining operations.
It’s hard to predict how the industry will evolve over the next five years, but I do think that institutions will continue to drive innovation in the space, creating a more secure network for Bitcoin. But this will bring new challenges such as censorship at the protocol level, more Know Your Customer/Anti-Money Laundering, less decentralization and so forth. Legacy Bitcoin-native mining companies must work hand-in-hand with these new entrants to shape a good future for Bitcoin.
Bitcoin Mining Revenue Hits Yearly High, After Return To Pre-Halving Levels
Bitcoin mining revenue has topped $20 million per day, its highest level this year.
Key on-chain metrics such as Bitcoin mining revenues have returned to pre-halving levels according to recent research.
Data from analytics provider, Glassnode, suggests that revenue from Bitcoin mining is now back at the same levels it was as when block rewards were double what they are now.
When the halving took place in mid-May, BTC prices were around $9,000. On November 18 they had doubled to $18,000 which suggests a correlation as miners need to sell enough of the asset to cover their expenses while remaining in profit. Higher prices mean greater profits.
#Bitcoin miner revenue is back at pre-halving levels.
— glassnode (@glassnode) November 18, 2020
Blockchain.com, which tracks the total value of coinbase block rewards and transaction fees paid to miners confirms the findings.
The daily revenue figure, which includes block rewards and transaction fees, for Nov. 18 was $21.2 million, its highest for a year. The previous peak was on May 6 when it reached $20.6 million. Following the halving event, which dropped block rewards from 12.5 BTC to 6.25 BTC, revenue plummeted to just over $7 million per day.
Mining revenue saw an earlier slump on March 18 this year following the pandemic-induced crypto market crash which wiped 45% off the price of Bitcoin in less than a week. When mining revenue falls steeply, over-leveraged miners can begin capitulating due to unfavorable market conditions.
The opposite appears to be happening at the moment as prices approach their all-time high.
Another factor indicating that the network is healthy and miners are happy is the hash rate, which is now just 10% away from its highest ever level.
Following the end of the rainy season in China, where the majority of Bitcoin mining takes place, rigs were powered down in preparation for relocation as cheap hydroelectric power dried up. This resulted in a seasonal hash rate slump of 37%, to below 98 Exahashes per second.
Since then, hash rate — which many believe is correlated to prices — has recovered to 143.4 EH/s which is not far off its mid-October peak of 157.6 EH/s according to Bitinfocharts.com.
The current mining revenue figures and hash rate recovery bodes well for the continuation of the bull market which may just take Bitcoin prices to a new all-time high before the end of the year.
With Share Price Outpacing Bitcoin, Riot Blockchain Appoints New Director
The Bitcoin mining giant appoints a new director with a stellar institutional background as stock prices surge.
Last week, as share prices ripped upwards of 50% to levels not seen since the 2018 cryptocurrency bullrun, Riot Blockchain (NASDAQ: RIOT) appointed former director of the listing committee for the Toronto Stock Exchange, Hubert Marleau, to the Riot board of directors.
The Colorado-based firm was in the market for a new director after the departure of former Canadian Cabinet member Remo Mancini. Marleau brings a wide range of regulatory and governing experience to Riot, having also served as governor of the Montreal and Vancouver stock exchanges. Marleau also boasts a strong academic background, and he currently serves as a chair for a lecture series in his name at the University of Ottawa.
Marleau’s appointment comes amid an unusually strong week for RIOT share price. RIOT closed at $6 even after opening the week at $4.10, easily outpacing Bitcoin’s nearly 20% rise. On the year, RIOT is up nearly 500% from $1.22.
Appointing a new director is not the only move that the mining giant has made in recent weeks. Riot agreed to a massive 8,000-unit, $17.7 million-dollar purchase of new Antminer S19 Pro Bitcoin mining rigs to expand operations in August.
The purchase may be an effort to stave off rival mining firm Marathon Patent Group’s efforts to swipe the “Top Miner in North America” crown. As Cointelegraph previously reported, Marathon themselves purchased 10,000 S19 Pro units in late October.
Like Riot, Marathon Patent Group’s MARA ticker is trading much higher on the week, closing at $3.39 price after a $2.38 Monday open.
Democratizing Bitcoin’s Hash Rate Takes Center Stage At Mining Summit
Bitcoin’s bull market is having a dramatic effect on demand for hardware resources as miners look to ramp up production.
Bitcoin (BTC) mining continues to ramp up following the successful May 11 halving, but growing industry concentration could undermine the “democratization of hash rate,” according to a panel presentation at this year’s Mining and Investment Summit.
Hosted by Matrixport and sponsored by Bitmain, the 2020 Mining and Investment Summit was held virtually Tuesday morning, bringing together the “leading companies in the fields of cryptocurrency mining and digital asset financial services.”
In a presentation called “Bringing Bitcoin Mining to a Broader Market,” Thomas Heller of HASHR8 provided an update on the mining industry, including trends in ASIC demand.
Heller indicated that the market is currently experiencing an “ASIC supply squeeze,” with a “large group of eager miners looking to buy.” He indicated that hardware suppliers Bitmain, MicroBT and Canaan are already taking orders for March to July 2021.
Commenting On The So-Called Bitcoin Supply Crunch, Heller’s Presentation Indicated:
“North American public and private companies continue to accumulate bitcoin, as well as expand their bitcoin mining operations. Leading to a supply crunch for BTC itself.”
A rush to accumulate Bitcoin by institutions and corporations has contributed to a rise in mining revenue, which, in turn, has caused a surge in demand for new and secondhand ASIC miners. Large miners are ramping up their operations amid the Bitcoin supply squeeze and are looking to bring as much hash rate as possible within their borders.
These trends could move the industry’s hash rate further away from democratization as China continues to dominate. As Heller notes, two-thirds of Bitcoin’s hash rate is concentrated in China-based mining farms.
China is generally believed to have one of the lowest breakeven rates for miners in the world. As of June, it cost between $5,000 to $6,000 to mine 1 Bitcoin in China, assuming an electricity cost of $0.04 kilowatts per hour. Globally, the Bitcoin mining breakeven rate could be as high as $8,500 in some jurisdictions.
Bitcoin mining is generally considered to be less accessible to individual miners due to the costs and resources involved. Over the years, the mining industry has come to be dominated by weighted pools, or groups of cryptocurrency miners that combine their computational resources. Although pool distribution isn’t as concentrated as it was before, in the last 12 months, three pools accounted for 45.3% of the hash rate.
Location and individual ownership of hash rate are important considerations when thinking about decentralization, Heller said on Tuesday.
HASHR8 recently announced the launch of Compass, a platform that matches Bitcoin miners with verified hosting facilities. The goal of Compass is to democratize mining profitability and bring more small-scale miners into the fold.
Long In China’s Shadow, The US Is Becoming A Bitcoin Mining Power Again
When it comes to the energy- and capital-intensive process of mining cryptocurrency, people tend to think of China, where about 65% of global hash power is located.
But like many other closely observed metrics in crypto, American hashrate is a number that seems to be on the cusp of significant increase.
Crypto mining, which harnesses data centers full of specialized computers to earn bitcoin by processing a so-called proof-of-work algorithm, is an industry that’s about to come out from under the radar in North America, say its proponents, and become new core infrastructure.
While the U.S. and Canada don’t have the cheapest energy on the planet, there’s plenty of underused power and energy infrastructure to repurpose. But the really deciding factor is stability, and with that comes access to capital markets and institutional investment.
There are at least 23 listed crypto mining companies, the majority of which are based in the U.S. and Canada.
“U.S. equity markets continue to be the most favorable listing venue for mining companies,” Ethan Vera, CFO and co-founder of mining company Luxor Technologies, told CoinDesk. “They can raise through [at-the-market] offerings, which provide a very solid financing method for public companies looking to scale up their operations. Foreign companies have more limited financing levers and have a relatively harder time raising capital through equity.”
A prominent example is Nasdaq-listed Marathon Patent Group, which spent $50 million on a fleet of Bitmain’s state-of-the-art S19 Pro Bitcoin mining computers earlier this year. Marathon is building out a 105-megawatt (MW) mining facility in Hardin, Montana, as part of a venture with Maryland-based power provider Beowulf Energy.
“As a public company, everything we do is transparent,” said Marathon CEO Merrick Okamoto on Tuesday at Bitmain’s Mining and Investment Summit 2020. “There are disadvantages to letting everybody know what you’re doing, but it’s also a benefit. It gives us unique access to capital markets. We’ve done two financings in the last year.”
China may have lorded it over the crypto mining space until now thanks to cheap labor and a massive over-build in dam and hydro generation infrastructure. But the U.S. has begun catching the attention of Chinese players looking to diversify, according to Peter Wall, CEO of London Stock Exchange-listed Argo Blockchain.
“I’ve had conversations with people in the mining industry in the last few months about Chinese miners coming over to North America,” Wall told CoinDesk. “There’s been talk about it for years, but it really now does appear to be a trend we’re seeing. Miners are always looking for more stability, which North America offers, and power and hosting costs in North America are competitive and sometimes even cheaper than Chinese options.”
The obvious geopolitical implication is that the U.S. could eventually take on China in this nascent arena. But the mining community would rather couch this in terms of greater decentralization, whether that means geographical spread or selling mining company shares to the public.
“Everybody loves the geopolitical angle,” said Mike Colyer, CEO of Foundry, a crypto mining investment company owned by Digital Currency Group (which is also the owner of CoinDesk). “But the goal is not for the U.S. to dominate bitcoin mining. That’s not gonna happen. The goal here is to decentralize it throughout the world.”
That said, Colyer anticipates a muscular market in the U.S. As well as the growth afforded public mining companies, there’s a bank of interesting opportunities available regarding private investment plays in the U.S. coming from the likes of hedge funds and private equity firms that own infrastructure.
“A lot of the power in the U.S. is deregulated, and private equity or hedge funds own a lot of power-generation facilities,” said Colyer. “They’re starting to recognize the idea they can make a lot of money mining bitcoin, and it also helps make their overall power generation more efficient. They actually save money on their core power generation, plus they can make money on bitcoin.”
Bitcoin mining comes in for some stick thanks to its gargantuan energy consumption, but less attention is paid to the fact it’s also at the forefront of energy innovation. Colyer calls the Bitcoin system’s mining algorithm “ruthless” in always driving for the lowest cost possible, which is generally towards renewables like hydro-power – the reason for a migration of up to 40,000 Chinese mining rigs at the end of Szechuan’s wet season.
Also on the renewable energy push is Layer1, the West Texas-based wind-powered mining operation backed by Peter Thiel.
A combination of smart investing and energy innovation is demonstrated by Greenidge Generation, a natural gas power plant in upstate New York converted into a crypto mining facility earlier this year by its owner, private equity firm Atlas Holdings.
Greenidge is a “cogeneration” facility where bitcoin mining can be used to add stability to the grid. Being connected to the Millennium Pipeline system, a very liquid forward, or over-the-counter, market, also allows Greenidge to hedge out input variable costs over multiple years, Tim Rainey, Greenidge’s chief financial officer, said at the Bitmain summit.
“We have positions all the way to mid-2022, so that’s a vehicle we use to lock in our mining economics,” said Rainey, adding that “25% of our overall capacity is dedicated to mining. Then the rest of it we use for sending power to the grid when it’s needed. So, prior to bitcoin mining, it would take us 12 hours to start up and put megawatts to the grid in periods of high demand. But now we can ramp up to full 100-megawatt power within an hour. So this provides additional stability to the grid as well as mining bitcoin.”
The U.S and Canada currently account for 15%-20% of global crypto mining hash power, with the rest split among Russia, Kazakhstan and the Nordic countries. There are around 15 mining facilities operating at scale in North America (above 50 megawatt), estimates Taras Kulyk, senior vice president, Blockchain Business Development at Core Scientific, the largest crypto mining operation in the U.S.
North America is now on a precipice of real growth, Kulyk says, thanks to its regulatory certainty and the huge amount of infrastructure built in the 1970s and 1980s in anticipation of growing manufacturing that never came. Now that people are starting to realize crypto mining is not some shady enterprise, the U.S. is better positioned at the boardroom level.
“The operational costs are a little bit more expensive in the U.S., but when you’re sinking $100 million or even a billion dollars into an ecosystem for infrastructure you’re looking at stability,” said Kulyk.
Some government support would also be helpful, said Kulyk. To this end, Core Scientific has put together a policy paper and will be working with the Chamber of Digital Commerce to get the word to the U.S. government.
“We want the folks in Washington, D.C., to understand that digital asset mining is not bad and that there’s a right way to do it,” said Kulyk. “I’m into crypto mining but I’m a ‘greenie’ at heart. I think the right way is through renewable power sources done at scale. The larger that becomes, the lower the burden on the environment.”
This Bitcoin Mining Company’s Stock Is In Free Fall Following Q3 Loss
Q3 was a tough quarter for mining rig manufacturers as the impact of COVID-19 continued to weigh.
The stock of one of China’s “big 3” mining firms is in free fall Monday after reporting another quarterly loss, underscoring the operating challenges imposed by COVID-19.
Canaan Creative, which manufactures mining rigs, released its third-quarter financial results Monday. The company posted a net loss of $12.7 million, or 54 cents per share, on revenues of $24 million. Although quarterly revenues grew 5%, the company’s net losses more than quadrupled.
Quanfu Hong, Canaan’s chief financial officer, poured cold water on the negative earnings release by claiming that demand for mining equipment rebounded during the quarter — a trend expected to continue in the final stretch of 2020. He said:
“(…) we have received a large number of pre-sale orders which are scheduled for delivery starting in the fourth quarter of 2020.”
Canaan’s share price, a consistent underperformer since debuting in Nov 19, plunged more than 10% Monday. The stock was last seen nursing losses of around 9.5%.
Canaan crashed in lockstep with the broader financial markets in February. After a brief recovery, the stock resumed its plunge through the spring. It would eventually stabilize below $3.00 before catching a strong bid in early November, possibly due to a correlation with Bitcoin (BTC).
Along with Bitmain, Ebang, and Microbt, Canaan dominates the global market for SHA256 miners. Due to broad industry consolidation, it’s possible that only “2 or 3 players will survive into the longer term,” according to research from crypto derivative exchange Bitmex.
The Chinese mining industry may have suffered the most due to COVID-related supply challenges, according to crypto analytics company Tokeninsight. Beyond the immediate impact of the pandemic, the segment appears to be in growth mode, especially in the manufacturing sector, where “new players are eager to enter the field.”
Bitcoin Mining Difficulty Approaches ATH As Price Stabilizes Above $18K
Mining difficulty on the network rose by 8.9% today while the hash rate is more than 130 EH/s.
The price of Bitcoin has reached a two-year high of more than $19,000 and fallen below $17,000 more than once in the span of a week as mining difficulty continues to rise.
According to on-chain analytics provider Glassnode, Bitcoin (BTC) mining difficulty increased by 8.9% today, putting the metric within 5% of its all-time high value set last month.
#Bitcoin mining difficulty increased by 8.9% today.
It is now only 4.4% below its ATH.
— glassnode (@glassnode) November 29, 2020
A rise in mining difficulty marked the start of bull cycles in 2013 and 2016, though it remains to be seen whether the coin’s recent rally to within 3% of its ATH price is long-term bullish. The price of Bitcoin fell by 11% last week as many whales moved some of their holdings to exchanges and is $18,122 at the time of publication.
Greater mining difficulty can mean an increase fees for users and the time required to generate a block in addition to increasing the number of unmined transactions in Bitcoin’s mempool. According to estimates from Earn.com, the optimal BTC transaction fee is currently 14,272 satoshis, or roughly $2.60.
The Ethereum (ETH) blockchain has also seen record highs recently. Glassnode reported mining difficulty for the network was at a two-year high on Friday following the price of the token falling from more than $600 on Nov. 23 to $513 in three days.
Bitcoin Miners Saw 48% Revenue Increase In November
Bitcoin miners generated an estimated $522 million in revenue in November, up 48% from October, according to on-chain data from Coin Metrics analyzed by CoinDesk.
The sharp revenue increase came as bitcoin soared through November, setting a new all-time high by month’s end after gaining over 40 percent. Monthly aggregate revenue in November hit the highest level since September 2019.
Revenue estimates assume miners sell their BTC immediately.
Measured by revenue per terahash (TH), the unit measurement for the speed of cryptocurrency mining hardware, miner revenue hit six-month highs as it climbed above $0.15 multiple times in November, the highest level since early May, according to data aggregated by mining software company Luxor Technologies.
Despite significant intra-year volatility, mining revenue measured by terahash per second (TH/s) is roughly flat year to date from roughly $0.138 per TH/s on Jan 1 to $0.135 per TH/s at last check.
Network fees brought in $54.9 million in November, or nearly 11% total revenue, a slight percentage decrease from the 12.2% of revenue represented by fees in October.
Fees steadily declined through November, coming down from the roughly two-year highs in late October, dropping from a $13 average transaction fee at the start of November to below $3 near month’s end, per Coin Metrics.
Notably, fees as a percentage of total revenue continues a strong upward trend since April, prior to the network’s third-ever block subsidy halving in May. Increases in fee revenue are important to sustain the network’s security as the subsidy decreases every four years.
Taking advantage of the revenue increase, miners are bringing more and more machines online after early November’s record difficulty drop, with the past two adjustments resulting in difficulty increases and a third consecutive increase projected for mid December, meaning an increase in resources required to mine than at a lower difficulty level.
As analysts predict bitcoin’s current rally is sustainable with the strong possibility of continued upward price movement, miners eye continued revenue growth through the end of 2020.
Riot To Test Immersion Cooling Bitcoin Mining Technology In Texas
Nasdaq-listed bitcoin mining company Riot Blockchain (RIOT) is piloting new liquid cooling technology for mining hardware in Texas to test solutions for effective mining in difficult temperature environments.
Riot is launching an 8-megawatt immersion technology testing initiative to “assess the potential for higher productivity and lower cost mining opportunities in Texas,” per a press release. Testing is scheduled to start in Q1 2021.
If successful, CEO Jeff McGonegal told CoinDesk the company envisions “deploying immersion at a larger scale over time, particularly in warmer climates where cooling is a chief concern.”
In high heat and humidity environments, cooling mining machines with liquid immersion instead of air cooling offer significant advantages for miners with razor-thin profit margins.
Not only does liquid cooling offer significant noise reduction compared with fan cooling. Immersion cooling can also increase usable hashrate per machine by up to 50% in some cases, prolong the lifespan of some machines and allow miners to install more machines per square foot than if the same facility used fan cooling. But maintenance can be difficult.
The mining industry is still standardized around air-cooled designs, which means air-cooled facilities are still the first choice for miners,” said Ethan Vera, co-founder of Seattle-based mining company Luxor Technology, in a direct message with CoinDesk.
“But in areas of high temperature and low humidity, miners use evaporative cooling as a cost-effective strategy to mitigate the heat.”
In hot, humid regions like Texas, Vera said, liquid immersion is “the cooling method of choice as it eliminates heat, dust and humidity issues.”
In planning this pilot project, the Castle Rock, Colo.-based mining firm is “looking to observe improvements operating in difficult mining temperature environments, combined with the additional performance that can be achieved as a result,” McGonegal told CoinDesk.
Participating in Riot’s pilot program are two bitcoin (BTC, +1.71%) mining hardware and energy software companies, Enigma and Lancium, that are providing the technology Riot plans to test.
In 2020, Riot shares have outperformed bitcoin year to date in 2020, gaining 660% since January and trading near $9.37 at last check. Over the same period, bitcoin gained 170%. The mining firm is now worth over $666 million.
US Bitcoin Mining Firm Core Scientific To Triple Capacity With Massive 59,000-Machine Order
U.S. blockchain and AI infrastructure provider Core Scientific has expanded its fleet of state-of-the-art crypto miners to over 77,000, comprising the largest-ever grouping of Bitmain Antminer S19 rigs outside of China.
Core Scientific, which offers a mix of hosted crypto-mining and data-science computation, ordered the miners earlier this year. The company announced Thursday it has now procured an additional 59,000 S19 and S19 Pro Antminers.
The new order will bring the total computational power hosted with Core Scientific to 7.26 exahash per second (EH/s) while using approximately 250mW of electricity, said Taras Kulyk, the firm’s senior VP of blockchain development.
“We are truly a global player with this order, which is a magnitude of scale larger than anything that’s been done in North America today” said Kulyk.
One of Core Scientific’s closest U.S. rivals, Nasdaq-listed Marathon Patent Group (MARA), recently announced it was buying some 10,000 Antminers, which will bring the firm’s total hashrate to 2.56 EH/s.
The new units will be spread across Core Scientific’s existing facilities in North Carolina, Georgia and Kentucky, Kulyk said. A large chunk of the energy consumed by the miners will be renewable power. Core Scientific’s facilities cover over 100 acres and the firm is now looking for more space to house the new rigs.
Core Scientific’s bullish news comes as the price of bitcoin hits all-time highs and the stocks of listed crypto mining companies surge upward. (Core Scientific remains privately held.)
While the U.S. hashrate is certainly on the increase, China far and away dominates crypto mining with around 65% of global hashpower. According to Cambridge Centre for Alternative Finance, U.S. and Canada combined account for just 8.5% of the pie. But North America has more publicly traded mining companies than anywhere else and a muscular reach towards institutional investors.
Recently, Core Scientific announced a deal with Digital Currency Group mining subsidiary Foundry to receive some $23 million in financing to build out mining equipment for Core and its clients. (Digital Currency Group is also the owner of CoinDesk.)
A further coup for Core Scientific happened back in September when it became Bitmain’s “cooperative repair center” for mining equipment in North America. That’s a big deal because it saves having to box up tons of computers and ship them to China.
“When you have 77,000 units, to have to unpack and ship them somewhere else for repair is a direct impact to your bottom line,” said Kulyk.
Bitmain is experiencing a spike in demand for the latest Antminers, which are sold out until July 2021.
“There’s absolutely a massive supply crunch right now,“ Kulyk said. “We are oversubscribed, even with this order.”
Beyond ASICs: 3 Trends Driving Bitcoin Mining Innovation
From the Bitcoin halving in May to the ongoing price rally today, bitcoin has certainly seen its fair share of ups and downs in 2020. Even as the price of bitcoin sets new highs above those of 2017, observers have remained cautious, fearing that this may very well be a bitcoin bubble 2.0.
However, pointing to a maturing market where interest in digital assets is rising among institutional investors, Bitcoin advocates have argued that this rally is not just another speculative frenzy. With such renewed optimism, one can only hope that this time, history doesn’t repeat itself.
At the same time, with miner revenues hitting pre-halving levels for the first time this November, much has changed since the genesis block came into being. No longer limited to a network of independent miners, we now see staggering operations at scale, in diverse jurisdictions stretching from lesser-known provinces in China to Kazakhstan and even Malaysia.
Despite this growth, the burgeoning mining industry faces existential risks. And not only the ones related to the long-term sustainability of bitcoin (BTC, -2.94%) mining after the last block is mined in 2140.
New Year, New Markets
With its inexpensive electricity, low production costs and readily available labor, China has long dominated the bitcoin mining sector. Yet, the center of gravity has started to shift in recent years, largely due to the emergence of mining pools in other parts of the world. Despite China still holding more than two-thirds of the global hashrate distribution countries such as the U.S., Russia and Kazakhstan are starting to catch up.
In order to carve out space and thrive in the bitcoin mining space, these new contenders need to consider a multitude of factors, namely: competitive energy prices or alternative energy sources, attractive real estate prices and a government supportive of digital assets.
Mining-friendly Kazakhstan, for instance, has seen significant growth in bitcoin mining activities, holding over 6.17% of the total bitcoin mining hashrate. This is in large part attributed to a tax-friendly government where crypto mining will not be taxed until the mined assets are exchanged for fiat money.
Then there is the legalization of mining, which saw a recent bill approved by the Kazakh Senate and signed into law earlier in June. The low electricity costs only serve as icing on top.
This approach has certainly paid off, with investments in local crypto mining operations expected to double by the end of 2020 and an additional $738 million expected to pour in over the next three years.
“China’s bitcoin mining crown will not be so easily displaced”
As we look towards 2021, bitcoin mining will continue to move in a positive direction and see continued momentum. For two years now, markets across the Commonwealth of Independent States (CIS), Europe and North America have grown. This trend is only going to be more prominent as miners look to new jurisdictions to avoid regulatory crackdowns while searching for lower-cost electricity.
In Europe and North America, plans for opening mining facilities may have been delayed as a result of the COVID-19 pandemic. But with the gradual recovery of the bitcoin market and the likelihood of a coronavirus vaccine in 2021, we may see a rebound in the demand for mining.
The implications of a new Biden administration on the treatment of cryptocurrencies, on the other hand, still remain unclear.
Despite new markets looming on the horizon, China’s bitcoin mining crown will not be so easily displaced. The Chinese government has called to accelerate the development of blockchain technology and financial incentives to advance in renewable energy-powered crypto mining.
Bitcoin mining has certainly come a long way since the early CPU days of Nakamoto’s genesis block. From initial innovations like GPUs and FPGAs to the birth of today’s ASICs, miners continue to seek out the fastest, most powerful and cost-efficient machines.
The current competitive state of bitcoin mining means that technological innovation needs to constantly keep up with the industry’s fast-growing demands.
If not, miners will no longer be able to compete based on equipment, but instead, look elsewhere – whether it’s in alternative sources of energy or other forms of consensus protocols – to further establish a competitive edge and earn maximum profits.
Since the ASICs revolution, much of the technological progress in bitcoin mining has come from the reduction of chip sizes and higher hashrates to provide miners with greater efficiency gains. However, these improvements have been plateauing with each new iteration.
And despite bitcoin mining being the ultimate manifestation of proof-of-work (PoW), questions over PoW’s long-term viability have been raised. Ethereum 2.0’s proof-of-stake (PoS) consensus is arguably a more sustainable and environmentally-friendly model.
When it comes to the next technological innovation, much has been said about the use of quantum computing. Touted as the next computing frontier, quantum tech may potentially crack Bitcoin’s security and effectively rendering Bitcoin’s cryptographic keys insecure. When this happens, a soft fork would be likely to occur, enabling the Bitcoin protocol to run on quantum-resistant algorithms and potentially even be operated by nodes that run on quantum computers.
However, it’s early days for quantum computing, and going into 2021 ASICs will still be the cornerstone of bitcoin mining. I believe bitcoin miners will be waiting another few years before the arrival of the next groundbreaking technology.
Sustainability Not For Sustainability’s Sake
As mining machines get increasingly powerful, so, too, will energy consumption increase.
Regions like China’s Xinjiang and Inner Mongolia have historically been reliant on coal energy to provide crypto mining companies with lower energy prices. China is seeking to address pollution on a broader level, recently stating its ambitions for a “green revolution” to become carbon-neutral by 2060. This means that mining with non-renewable sources of energy such as coal will become increasingly cost-inefficient for China-based miners.
To further compound matters, bitcoin miners have traditionally relied on the cheap electricity powered by hydroelectric plants in the Sichuan province as their source of renewable energy. But when you consider that hydropower is only available during the wet season in China, six months of the year, it’s no surprise that bitcoin miners have cast their eyes to more innovative and sustainable sources of energy across novel jurisdictions for renewable or surplus energy.
As 2020 comes to a close, the future of bitcoin mining looks bright. Just as we recovered from the last bitcoin bubble popping, 2021 will see a brighter outlook as the fourth industrial revolution plays out.
In reimagining a mining ecosystem that is both sustainable and viable, we will do well to plan strategically for the long-term and not only consider short-term wins – whether it’s in tech or profitability – focusing instead on the complete integration of commercial, sustainability and environmental goals.
Linzhi Begins Rollout of Long-Awaited Ethereum Miner ‘Phoenix’
Ethereum’s mining competition just got a bit hotter, even as the second-largest blockchain by market cap has begun the formal process of getting rid of its dependency on the industry all together.
Shenzhen, China-based mining firm Linzhi Inc. has begun rolling out a new Ethereum ASIC miner dubbed the Phoenix, reportedly three times more powerful than top options available today. As reported by CoinDesk, the journey to produce a more powerful and efficient Ethash ASIC miner was begun some two years ago by Chen Min, former CTO of mining giant Canaan.
Mining pool F2 Pool released a demo of the new machine on YouTube Saturday. The Phoenix outpaces the next best A10+ Pro at 2,600 megahashes per second MH/s to around 500 MH/s. Linzhi’s new machine is also more energy efficient clocking in at 3,000 watts per hour to the A10+ Pro’s 1,300 W, F2 Pool says.
“If you look back on CoinDesk reporting about Linzhi dating back to the first article in September, 2018, it’s clear we had delays,” Linzhi Director of Operations Wolfgang Spraul told CoinDesk in an email. “Some due to underestimating the technology, then some due” to the coronavirus pandemic.
Spraul said the firm is rolling out pre-orders and limited quantities to “developers, community, pool operators, etc.” Innosilicon carries the A10+ Pro for about $4,440 per unit while Linzhi has yet to release a public price figure.
Scrapping Ethereum Mining
The new product comes as the Ethereum network has begun a technical transition from a proof-of-work (PoW) consensus mechanism to proof-of-stake (PoS). That process began Dec. 1 with the launch of the Beacon Chain. That chain acts as a central conductor for the new blockchain network which uses coin deposits as a means of securing the network, called “staking,” over mining.
Still, miners have at least a two-year runway with PoW on Ethereum. The current network, Eth 1.x, won’t be moved over to the new PoS blockchain until phase 1.5 of Eth 2.0.
The current Linzhi Phoenix demoed by F2 Pool will need at least one upgrade to stay useful before that transition, however.
The Ethereum network’s directed acyclic graph (DAG) – a component of Ethereum’s PoW algorithm called Ethash – stands at just under 4 gb, while each Linzhi Phoenix only has a 4.4 GB memory. The incumbent A10, on the other hand, can house between 6 and 8 gigabytes, F2 Pool says.
The Phoenix will need a bump in memory size or aftermarket components if it is not to become obsolete before phase 1.5. Spraul told CoinDesk in an email that the Phoenix miners currently rolling out are limited to quantities of pre-orders. The firm is “working on a successor with an increase in DAG memory – no specs yet,” he said.
Of course, other Ethash-based cryptocurrencies such as Ethereum Classic will still be using proof-of-work, meaning a market will still exist for the Phoenix even after Eth 2.0 phase 1.5.
Bitmain’s ‘Hard Fork’ To End In $600M Settlement In Favor Of Micree Zhan
The year-long dispute between Bitmain co-founders appears to be at an end with a $600 million compensation on the table.
After months of wrestling for control of the company, Bitmain co-founders Jihan Wu and Micree Zhan have reportedly reached a settlement. According to Chinese crypto expert Colin Wu, and reported by multiple local publications, both parties have agreed to a $600 million compensation for Jihan Wu with Zhan taking control of the crypto miner maker operations.
As part of the settlement, Wu will exit the company taking the BTC.com mining pool as well as Bitmain’s overseas mining centers. Thus, Zhan will be left with the Antpool mining pool and Bitmain’s China-based mining farms.
The deal also sees Zhan left in charge of the artificial intelligence (AI) division and the mining rig hardware manufacturing enterprise. Zhan will temporarily mortgage his shares to raise the $600 million required to buy out Wu’s stake in the company.
Sequoia Capital will act as the middle regulator in the negotiations with the deal expected to be ratified at the upcoming shareholders meeting slated for Dec. 28. However, reports indicate that the current terms of the agreement could change in the interim.
While the move represents a settlement of the current dispute, the splitting of Bitmain’s assets does pit both co-founders as competitors going forward. As part of the agreement, Zhan will reportedly complete an initial public offering in the U.S. before the end of 2022.
The company’s first IPO attempt elapsed back in March 2019 and likely sparked off tensions between both co-founders. Both figureheads stepped down from running the company but Wu returned in October and ousted Zhan in a shock move.
A month later, Zhan declared his removal from the company as illegal and threatened legal action. Zhan later regained control of Bitmain’s office in Beijing, storming the building with security personnel in early June 2020
Riot Blockchain Buys 15K Bitmain Antminers, Expects 65% Hash Rate Increase
Nasdaq-listed crypto firm Riot Blockchain purchases additional 15,000 Antminers from Bitmain for $35 million.
Riot Blockchain, a Nasdaq-listed cryptocurrency mining company, has inked another deal with Chinese mining giant Bitmain to buy 15,000 Antminers. According to a Dec. 21 announcement, the Colorado-based firm expects the new purchase will contribute a 65% increase to its total Bitcoin (BTC) mining hash rate.
The purchase cost Riot $35 million, comprising of 3,000 S19 Pro Antminers and 12,000 S19j Pro Antminers. The company expects to receive and deploy the new miners starting from May 2021 up to October 2021.
With the latest purchase, Riot further expands its total mining equipment from Bitmain, as the company has been regularly receiving and deploying new miners in 2020. At full deployments of more than 37,000 miners, Riot estimates its total operational hash rate to surge from 2.3 EH/s to 3.8 EH/s, consuming about 120 megawatts of energy.
Riot CEO Jeff McGonegal said that continued growth in deployed miners is “paramount to a miner’s success,” adding further: “Expanding the Company’s bitcoin mining hash rate and operating on a cost-effective basis is very important, particularly during periods when the bitcoin spot price has appreciably increased.”
As part of its partnership with Riot, Bitmain has been consistently delivering its latest Antminers to the United States-based firm. In October 2020, the companies announced a deal for 2,500 Antminer S19 Pro on top of the previous batch of 5,100 Antminers deal and another one for 8,000 Antminers in September.
Bitmain, one of the world’s largest crypto hardware suppliers, have been actively tapping the North America market. In September 2020, Bitmain announced that mining operator Core Scientific will become its first North American cooperative repair center.
Previously, Bitmain partnered with Foundry, a wholly-owned crypto mining subsidiary of Digital Currency Group. As part of the partnership, Foundry was set to provide financing to Bitmain’s end customers in the market.
Mining Firm Bitfarms Set To Reach 1.2 EH/s Hashrate, Deploy 3,000 New Machines
Publicly traded bitcoin mining company Bitfarms (BITF) announced its deployment of 1,000 Whatsminer M31S mining machines with another 3,000 set to be deployed in Q1 2021.
* The mining capacity expansion is set to push Bitfarm’s hashrate above 1.2 exahashes per second (EH/s), per an announcement shared with CoinDesk, just over one third of its target 3 EH/s hashrate.
* To date in 2020, the Toronto-based firm has acquired or deployed nearly 6,000 new machines, according to prior press releases.
* Other mining companies, including Colorado-based Riot Blockchain (RIOT), are on shopping sprees for new mining machines as leading manufacturers like Bitmain have sold out until Q3 2021. Strong demand has pushed miners to secondary markets as they scrounge for any available machines, per CoinDesk’s prior reporting.
* Shares of Bitfarms are trading hands around $2.62 at last check, a more than 230% gain to date this month.
* Bitcoin gained roughly 20% over the same period.
Top Crypto Mining Hardware To Expect In 2021
With crypto mining gaining momentum, here’s the newest products coming out in 2021 and what Bitcoin miners should look to buy.
At the beginning of this unusual and sometimes difficult year, the cryptocurrency world reminisced about the crypto mining boom and whether it was now over. But soon, the fears were washed away as large companies registered on Nasdaq expressed clear interest in mining Bitcoin (BTC) for additional earnings.
It has been said more than once that this year’s sharp rise in mining is directly related to the significant increase in cryptocurrency prices. During the summer, Bitcoin could be bought at just above $10,000; now, it’s priced at well over double the amount.
Altcoins are not lagging behind, either. Ether (ETH) reached the $650 mark this month and Litecoin (LTC) was above $117 recently, although six months ago, the latter could be bought for just $41.
As price analysts expect the bullish market trend to continue into 2021, the most up-to-date hardware offerings are likely to be in high demand. So, here are some of the most interesting products on the hardware market that miners should expect to see on the shelves in 2021.
On Solid Ground
When it comes to Bitcoin mining, ASIC miners are the main choice for hardware. An ASIC, or application-specific integrated circuit, is a ready-made device that is easy to set up and program.
When mining Ether and Ethereum-based tokens, things start to get more interesting, since they require putting together a rig that consists of a motherboard, GPU cards and several other components.
So, what was in use this year and what did the world’s miners spend the most money on? Most recently, Riot Blockchain purchased 15,000 variations of the Antminer 19 series, to be delivered in 2021. Nathaniel Justin Yu, manager from International Marketing team at Bitmain, confirmed to Cointelegraph that the Antminer 19 Series models released in May 2020 were in high demand among Bitcoin miners:
“We have been seeing a growing demand for mining hardware, especially for our Antminer 19 Series models (Antminer S19 Pro, S19, and T19). 19 Series delivered a industry-leading market performance this year as it is equipped with a new generation custom-built chip, achieving a power efficiency as low as 23 J/TH. Our Antminer products have been purchased until July of 2021.”
For those who decided to put together mining rigs by themselves, the list of the most in-demand equipment for mining this year naturally starts with the GPU cards. Two long-time rivals presented their newest lines this year: Nvidia with its top-end GeForce RTX 3000 Series GPU cards in September, followed by AMD’s Radeon RX 6800.
Miners are still divided over which of these cards is better, but the main question is when will these cards be available to everyone, as demand significantly exceeds supply. While Nvidia GeForce RTX 2080 Ti and AMD Radeon RX580 are still top-end cards, the interest around the new offerings will likely spill into 2021.
Next year, Bitmain will continue to delight users with series 19 ASIC miners. According to the manufacturer, new solutions will be implemented that help increase the efficiency of mining.
Another Chinese manufacturer, Canaan Creative, introduced a new model of the miner AvalonMiner 1246 in September, which claims to have 30% better efficiency than the previous model. According to the producer, AvalonMiner 1246 could reach 90 terahashes per second, while A11 series process at an average of 60–68 Th/s.
The miner will be available starting in January. Although this model is inferior in performance to Antminer 19, it’s cost is slightly cheaper. At around $3,000 it’s still worth a second look for those wishing to mine Bitcoin.
New GPU Cards
While Nvidia was having difficulties with the release of its flagship GeForce RTX 3060 Ti, AMD is already working on the next one, having just presented its 6000 series. The company announced the release of the next series with a new RDNA 3 architecture in late 2021.
According to the manufacturer, the GPU should surpass the previous one in performance by 50% and will require less power and cooling to run.
But Nvidia should not be written off just yet. Despite some delays in launching its GeForce RTX 3000 cards, the company may be preparing to present new products during the event scheduled for Jan. 12, 2021.
Presumably, the manufacturer will unveil Ti and Super modifications, which should please miners. In any case, the line will expand with cards of different price categories, and this will allow users to have more options when putting together mining rigs.
If GPUs are the preferred method for mining, a good motherboard is an absolute must. The main feature in this case is the number of slots GPU cards can be installed into.
Given what’s already available in the mining motherboard market, with the likes of MSI H310-F PRO, which has 13 GPU card slots, or the Asus B250 Mining Expert with 19 slots, miners should not expect to receive any special presents from manufacturers in 2021.
However, new goods are on the way. Biostar, one of the biggest hardware producers, recently introduced a new TB360-BTC D+ motherboard designed for cryptocurrency mining. The motherboard has eight PCIe x16 slots, which is sufficient for a standard rig. However, the price and the sales start date are not yet clear.
Hardware That Shouldn’t Be Overlooked
For efficient mining, the choice of each component is crucial. Apart from the correct GPU card and motherboard, uninterrupted internet and electricity is a must.
Additionally, equipment for mining cryptocurrencies is very noisy and can get hot, so miners need to follow safety precautions. When mining at home, running the rig in an air-conditioned room is the best option for when it’s warm and a balcony when it’s not.
On top of that, it’s worth choosing a powerful power supply with sufficient power and, most importantly, with protection against power surges and other electrical problems. One such option that will be shipped at the start of 2021 is the EVGA SuperNOVA 1000, which costs almost $200.
Choosing a frame is not the last task, because it affects the level of noise generated by the rig. Guntis Vitolins from Mineshop company, which offers both ready-made rigs and equipment separately, noted to Cointelegraph that miners’ tastes in frames have changed this year:
“GPU mining industry has changed since 2017, most of the miners prefer the server type riser less GPU cases over open air frames with risers. As the cooling is better in closed case and also installation is much faster. Only downside on these cases is they could be a bit noisy at 50–60db.”
For those who do not want to figure out the complex topic of designing a mining rig, GPU card selection and so on, there are companies that offer turnkey solutions. This year, experts have been discussing the growth in sales of these ready-made rigs, dubbed “mining 2.0.”
Vitolins further stated that “sales have increased dramatically since March 2020,” adding that GPU miners built with AMD graphic cards (the best cards for mining Ether) have been a particular hit.
Is 2021 Good For Mining?
Looking at the growing cryptocurrency prices and the excitement around mining equipment gives hope that 2021 will start off no worse than the previous year for the industry. However, it is impossible to predict whether crypto mining will stay in fashion due to economic uncertainty amid the devastating COVID-19 pandemic.
But, it is safe to say that miners in 2020 have become more experienced and battle-tested following Bitcoin’s mining reward halving and the not-so-smooth rainy season in China. Today, miners are no longer babies seeing the world around them for the first time, but ready for market shocks and able to adapt to any conditions. Furthermore, as large, public companies are starting to enter crypto mining, 2021 should further solidify the adoption and acceptance trend.
Marathon Patent Agrees To Buy 70K ASIC Miners From Bitmain For $170M
Nasdaq-listed Marathon Patent Group (MARA), one of the largest enterprise bitcoin mining companies in North America, announced its pre-order purchase of 70,000 Antminer S-19 ASIC miners from Bitmain for $170 million, more than tripling the size of Marathon’s fleet.
* “This purchase is the largest order in dollar terms as well as the single largest order for S-19 ASIC miners that Bitmain has ever received,” said Marathon Chairman and CEO Merrick Okamoto.
* Marathon said it sees receiving an initial batch of 7,000 S-19 miners in July 2021 and the final shipment in December 2021.
* Marathon said its mining fleet will include more than 103,000 machines after this latest order has been received and deployed with a total mining capacity of 10.36 exahashes per second (EH/s).
* Shares of Marathon opened Monday trading nearly 30% higher than their Friday close, trading hands just below $14. But some gains were given back as the share price dipped roughly 5% around 15:30 UTC.
* The monster order comes after a holiday weekend in which the price of bitcoin (BTC, +1.05%) hit a succession of new all-time highs.
Bitcoin Mining Company Riot Blockchain Passes $1B In Market Cap
Nasdaq-listed bitcoin mining company Riot Blockchain (RIOT) reached a $1.08 billion market capitalization Monday after surging nearly 13% in early trading hours.
* Shares of the Castle Rock, Colo.-based firm have gained over 1,250% in 2020, currently trading hands above $16.
* Over the same period, bitcoin (BTC, +1%) gained nearly 280%.
* Riot has issued nearly 17 million shares since November, with a total of 67.5 million shares outstanding, according to data collected by ycharts.com.
* Riot has aggressively expanded the size and sophistication of its mining operations in 2020, including a planned pilot project in Texas to test water immersion cooling technology in addition to purchasing over 31,000 new ASIC mining machines this year, per CoinDesk’s prior reporting.
* Riot shares opened Monday nearly 18% higher than the Thursday close on Christmas Eve.
* Riot pivoted its business model from biotech to bitcoin mining in October 2017 when the company’s value was less than $50 million.
* Riot did not immediately respond to a comment request from CoinDesk.
Bitcoin Mining Machine Maker Ebang To Launch Crypto Exchange In 2021; Shares Rise
Bitcoin mining equipment maker Ebang (EBON) announced Thursday it is preparing to officially launch a cryptocurrency exchange in the first quarter of 2021.
* Shares of the Nasdaq-listed mining equipment manufacturer rose on the news, jumping to as high as $6.18 a share before settling down to $5.71 at the time of this writing, up 16%.
* Ebang said it has started publicly testing its cryptocurrency exchange and will officially launch in the first quarter of 2021.
* Very little has been revealed about the proposed exchange, except that Ebang has said it will be a regulatory-compliant cryptocurrency exchange that would strictly operate outside of China, where the government has cracked down on trading platforms.
* Recently Ebang set up a wholly owned subsidiary in Australia as part of its strategy to create a digital asset trading platform.
* In a statement, Ebang Chairman and CEO Dong Hu said the completion of the internal testing of the cryptocurrency exchange is a step forward in expanding its blockchain financial services business.
* “We will also explore other business opportunities in the blockchain and cryptocurrency industry such as establishing mining farms and cryptocurrency mining to optimize the structure of our offerings in the blockchain industry value chain,” said Hu.
Bitcoin Mining Machine Shortage Worsens As Bitmain Sells Out Through August
Even though leading bitcoin mining manufacturer Bitmain doubled prices to capitalize on overwhelming demand resulting from the surge in the price of bitcoin, it still pre-sold three months of inventory in a few weeks.
In early December, Bitmain was pre-selling bitcoin ASIC miners with an expected shipping date of May 2021, per CoinDesk’s prior reporting. Less than a month later, Bitmain has sold out through August 2021 and has raised its prices significantly.
In late November, Bitmain’s Antminer S19 was priced at $1,897. Now, the same machine sells for $3,769 a 98% markup.
Bitmain’s prices have gone up, said Kevin Zhang, vice president of business development for New York-based mining company Foundry, noting that demand for new ASICs shows no sign of abating soon. “But there also has been very limited extra allocation for May though July next year for S19s and S19 Pro models.”
With miners eager to buy any available machines, secondary mining markets continue to benefit from primary manufacturers’ low inventory with activity surging to its highest levels since 2017. Prices for more efficient, second-hand models have climbed to 12-month highs, per Luxor Technologies market data.
“Secondary markets are also booming”, said Amanda Fabiano, head of mining at Galaxy Digital. “S9s that were being sold in May 2019 for $20 are now being sold at $130 on some channels,” she told CoinDesk in an email.
The surge in mining activity comes as bitcoin ended 2020 with a more than 300% gain, currently trading just below $31,000. Miner revenue has also soared with the dollar amount earned per terahash per second (TH/s) reaching $0.25 Sunday, its highest level since August 2019, per data from Luxor.
To meet growing market demand, Bitmain has “been enhancing the efficiency and capabilities of our manufacturing facilities,” said International Marketing Director Nathaniel Yu.
But Yu doesn’t expect demand for mining machines to subside anytime soon as “more institutional investors take interest in cryptocurrencies and blockchain technology.”
Fabiano described the current mining machine market conditions as a “perfect storm” for supply constraints: limited capacity at the foundries, larger facilities buying up supply, and companies with strong balance sheets entering the market with the ability to place massive orders.
Those massive orders are coming from mining firms like Riot Blockchain (RIOT), who bought over 31,000 new machines this year, Core Scientific, who bought 59,000 machines from Bitmain in one order, and Marathon Patent Group (MARA) who expanded their mining fleet to over 100,000 machines.
“At this rate, hardware procurement will continue to be an obstacle throughout 2021,” Fabiano said.
Canaan Releases Liquid-Cooled A1066I Bitcoin Miner
Canaan’s new miner is natively cooled by immersion in liquid, promising better performance.
Canaan, one of the earliest manufacturers of Bitcoin (BTC) ASIC miners, has released the Avalon Immersion Cooling Miner A1066I, a device designed to be liquid-cooled.
Unlike traditional air-cooled devices and common types of liquid cooling for enthusiast PCs, the A1066I’s electrical components are submerged in a special dielectric fluid that carries heat away directly from the boards.
Dielectric fluids are specially engineered to insulate the components and avoid the corrosion damage and short circuiting that would occur with standard water or other types of fluids. This is also different from liquid cooling based on water blocks, where a special heat exchanger isolates the water from the components.
The A1066I is a large container device that can hold up to 90 immersion-cooled units. Canaan claims that each unit produces 50 Terahashes per second for a power consumption of 3400 watts, while each tank reaches up to 7200 TH/s and 306 kilowatts of energy usage when fully stacked.
While Canaan claims the A1066I has better performance than its air-cooled top-of-the-line A1246, the latter packs 90 TH/s of hashrate for the same energy consumption, making it more efficient on paper.
Cointelegraph asked for clarification on the figures but did not immediately receive a response.
Nonetheless, the native liquid cooling feature can make the device more attractive to certain categories of miners, especially those in warmer regions. The more effective cooling method also allows for more aggressive overclocking, potentially allowing for higher hashing performance — though electricity consumption remains an important constraint when trying to boost the hash rate. The cooling method also benefits from protection against dust and overheating.
Canaan is one of the original ASIC manufacturers and the first to launch a successful initial public offering on NASDAQ. Its performance has been lackluster since then as lawsuits and claims that the company misled investors surfaced. Quarterly operating losses weighed heavily on the stock price too.
Canaan’s chief competitors are Bitmain, which is having its share of troubles as well, and MicroBT, an up-and-coming manufacturer that has steadily gained market share in the past months.
Cryptocurrency Mining Firm Marathon’s Market Cap Passes $1B
Nasdaq-listed cryptocurrency mining firm Marathon Patent Group (MARA) reached a total market value of $1 billion as its shares surged Wednesday to the highest in more than three years, over $17.
* Shares of the Las Vegas-based company have soared over 1,700% in the past 12 months. Bitcoin gained roughly 330% over the same period.
* Marathon has been mining some cryptocurrency since at least 2016, but considerably increased its focus on mining operations in the past few years. At the cryptocurrency market’s prior peak in late 2017, Marathon barely had a $50 million market capitalization. Coinciding with its recent nearly parabolic increase in share price, Marathon has aggressively expanded its mining capacity, with a total of 90,000 new machines purchased in October and December.
* In an email to CoinDesk, CEO Merrick Okamoto said the milestone is “a very special moment for our company.”
* “Many of our shareholders stuck with us through the difficult times in our industry,” Okamoto said. “We feel honored that those who stayed on this journey are now reaping this financial reward for their patience and confidence in our company.”
* The company also completed a $200 million capital raise Monday and announced a “clean block” mining pool with DMG Blockchain Solutions “that adheres to the Office of Foreign Asset Control’s (OFAC) compliance standards and reduces the risk of mining blocks that include transactions linked to nefarious activities,” per a release.
* Marathon reached the billion-dollar market value club a week after publicly traded bitcoin (BTC, +7.53%) miner Riot Blockchain also reached $1 billion in market value.
* Bitcoin’s sustained rally over the past year has benefited publicly traded mining companies across the board, with the gains of nearly all of their shares outperforming the leading cryptocurrency, per CoinDesk’s prior reporting.
Bitcoin Miners See Revenue Per TH/s Nearly Triple In 3 Months
Bitcoin mining revenue has nearly tripled in the past three months measured by dollars per terahashes per second (TH/s).
* In early October, miners were earning roughly $0.078 per TH/s.
* Following bitcoin (BTC, +9.16%)’s parabolic price rally, that revenue has soared by 265%, reaching $0.284 Thursday.
* Not since early August 2019 has miner revenue reached these levels, according to data from Luxor Technologies.
* Bitcoin cut through the $40,000 mark Thursday afternoon, extending its early year gains to well over 30%, extending on its more than 300% gains in 2020.
* With market conditions prompting existing miners to expand their operations and new participants to join the sector, mining equipment manufacturers are struggling to keep pace with demand. Bitmain, for example, has sold out until August and nearly doubled the price of its S19 model, per CoinDesk’s prior reporting.
* Amid the mining machine shortage, miners are scouring secondary markets for any available and efficient machines they can find as mining revenue continues to increase along bitcoin’s price.
Cryptocurrency Miner Hive Blockchain Passes $1B Market Value
Publicly traded cryptocurrency mining company Hive Blockchain (HIVE) has passed $1 billion in market value as its shares continue to surge amid bitcoin’s parabolic rally.
* The Vancouver-based company has a current market value of $1.17 billion at last check with 345.7 million shares outstanding.
* Hive first crossed the 10-digit mark in early November 2017 shortly before the cryptocurrency market peaked a month later. For most of the past three years, Hive’s market value has stayed below $200 million.
* Hive shares rallied over 2,500% in 2020 and have added an additional nearly 40% gain so far in January, currently trading around $3.32. In 2017, shares peaked just above $6.75.
* To date in 2021, bitcoin (BTC, +1.18%) has gained over 40% after reaching nearly $42,000 Friday morning.
* Coinciding with its soaring market value, Hive has focused expanded its mining operations with the purchase of over 3,000 new mining machines in 2020, with nearly half of that number purchased and deployed in November 2020 alone.
* Hive competitors Riot Blockchain (RIOT) and Marathon Patent Group (MARA) both also recently hit the $1 billion market value in late December and early January respectively, per CoinDesk’s prior reporting.
Square Crypto Funds Bitcoin Developer To Improve Mining Pool Software
Square Crypto’s latest grant will fund a Bitcoin developer’s work on software that could improve how mining collectives pool hash power.
Pseudonymous developer Fi3 (@piccioneLibero2 on Twitter, or “free pigeon”) will receive an undisclosed sum to work on an implementation of Stratum V2, the next iteration of a Bitcoin mining protocol software developed by Braiins.
“Square Crypto is excited to support the development of a high quality open-source implementation of Stratum v2,” Square Crypto lead Steve Lee said to CoinDesk. “This software benefits miners by maximizing their revenue and providing more freedom and security.”
‘Personal freedom’ to pursue Bitcoin development
“I wanted to work on something related to Bitcoin,” Fi3 told CoinDesk. The Bitcoin developer has previous experience working with Bitcoin’s mining industry via a collaboration with Italian mining company Bitminer Factory. Fi3 is proficient in the Rust programming language, which will be used to code the upgrade, so once they saw the opportunity they “caught it.”
“I also like the personal freedom that this kind of grant gives you,” Fi3 continued.
Read more: Square Crypto’s 20th Grant Will Support Bitcoin Design, User Experience
The co-author of the proposal, Jan Kvapil, will begin work on the implementation in February, Fi3 said.
Stratum V2: Giving Bitcoin mining a boost
A mining pool is a collective of miners – from big industrial players to hobbyists farming in their basements – who combine their hash power to increase their collective chance of mining a block.
The Stratum software coordinates this pooled mining. The new edition, V2, will patch a handful of security flaws present in its 2012 predecessor, while improving connection speeds between miners in the pool. It will also give individual Bitcoin miners a say in which transactions they want to include in the blocks that the pools mine, allowing individual miners a bit more freedom in the process.
Fi3’s goal is to develop and create a Bitcoin Improvement Proposal (or BIP, code that alters some aspect of the Bitcoin network or protocol) that paves a clear path to activating the upgrade. Stratum V2 has been in the works for some time, but the grant will fund the changes that should finally push the project to fruition.
Toward this end they will consult with Braiins co-founder Jan Čapek and former Bitcoin Core developer Matt Corallo, who now works full-time for Square Crypto as a developer on open-source projects.
Fi3 said a Bitcoin Core pull request for implementing Stratum V2 could be ready in 6 months; this would include a BIP that outlines activation. After this point, “a well-tested implementation [of Stratum V2] should be ready” in a year, Fi3 said.
Are Bitcoin Miners Bullish? BTC Mining Difficulty Sees Biggest Bump In 3 Months
The average amount of Bitcoin miners are selling continues to gradually decrease.
Bitcoin (BTC) mining difficulty is increasing by roughly 11% on Jan. 9, according to data from BTC.com. This marks the biggest increase in nearly four months that will put the metric over 20 trillion for the first time ever.
“Hashrate is on a tear!” commented popular pseudonymous Bitcoin trader hodlonaut three days ago. “When difficulty readjusts in 3 days, it will crush through 20T for the first time in Bitcoin history.”
Bitcoin Network Difficulty Reaches 20 Trillion
The network difficulty is a relative measure of how hard it is to mine a new block for the Bitcoin blockchain.
With the hash rate currently at record levels of around 148 EH/s, the difficulty adjustment, which occurs every 2016 blocks, makes sure that the time between blocks mined remains 10 minutes on average.
Miners Remain Bullish
Meanwhile, simultaneous rising hash rate and mining difficulty suggest that miners are continuing to allocate a record number of resources to secure and invest in the network.
Since the halving in May, the total outflows of BTC from miners have been gradually decreasing on average — the opposite of BTC/USD. Hence, miners are still showing no signs of major selling despite the price of Bitcoin skyrocketing to over $41,000 in the past week.
What’s more, the Miners Position Index (MPI), which calculates the ratio of BTC leaving all miners wallets to its 1-year moving average, is currently at 4.5. Values above 2 indicate most miners should be selling.
This suggests that miners aren’t eager to part with their freshly-minted BTC at the moment, particularly as exchange BTC reserves plummet and the price is in a strong, accelerating uptrend.
Thus, it may make sense for some miners to hold their inventory and benefit from the accelerating bull market that may last into December 2021, according to some predictions.
Meanwhile, concerns of a “mining death spiral” continue to be disproven with every new network record as Bitcoin network fundamentals appear stronger than ever. Overall, Bitcoin miners seem to be in a financially secure position from a rising BTC price, remaining financially secure even though it has never been harder to mine BTC.
Currently, each BTC block mined is worth roughly $253,600 with around 9.44% coming from network transaction fees, according to the latest data from Clarkmoody.
Max Keiser Predicts Bitcoin Price Rise As Hashrate Hits New All-Time High
The hashrate for bitcoin broke its all-time high record which has led Max Keiser to predict that a price increase will follow.
Bitcoin Hash Rate
For blockchain-based projects like bitcoin, a higher hashrate means that the network is more secure, further driving investor confidence in the product. It also gives a snapshot of the amount of ‘labor’ being contributed to bitcoin, which creates more competition for miners and shows they’re betting on the cryptocurrency, as mining is resource intensive and has singiifcant energy costs.
Earlier in the month, crypto analyst and bitcoin bull Max Keiser posted a tweet that bitcoin price “follows hashrate,” and that hashing has been on a bullish trend for nine years.
— Max Keiser (@maxkeiser) August 8, 2018
Increased hashing power can indicate market confidence, but it also creates higher operating costs for miners obtaining block rewards. The prevailing theory has been that increased competition for BTC drives up value inherently, as miners are forced to sell at a higher price to cover costs.
Not everyone agrees that the “Labor Theory of Value,” applies to bitcoin, but Keiser is adamant that hashing is a bullish indicator.
Kentucky Bill Seeks To Lure Crypto Miners With Tax Breaks
Two Kentucky lawmakers have called upon the commonwealth to offer tax breaks to cryptocurrency miners seeking to tap into the energy rich region.
* General Assembly Representatives Steven Rudy and Chris Freeland’s bill introduced last week would exempt “commercial cryptocurrency miners” from paying 6% sales taxes or 6% excise taxes on their rigs’ electric bills and mining equipment.
* Kentucky “has an opportunity to become a national leader” in crypto mining because of its low energy rates and abundant supply, said the bill. Tax breaks would help the Commonwealth further compete.
* The Republican lawmakers submitted their 13-page bill to the General Assembly on Jan. 8, where it now sits in committee. Neither representative responded to a request for comment.
* The Block first reported the bills’ submission.
Riot Blockchain Adds Blockware CEO To Advisory Board
Mason Jappa is the latest addition to Riot’s changing boards of directors and advisors.
Nasdaq-listed bitcoin miner Riot Blockchain (RIOT) has added Mason Jappa, CEO of mining hardware and hosting company Blockware, to its advisory board.
* The two companies have had a close working relationship, Jappa told CoinDesk, including sharing industry insights and Blockware helping Riot sell machines.
* Per a statement, Jappa will assist the billion-dollar company with “optimizing operations” and its “evaluation of growth opportunities,” among other responsibilities.
* Jappa is the latest in a series of changes to the Castle Rock, Colo.-based firm’s board of directors and board of advisors over the past two years.
* In July 2019, the company named Yan Pritzker and Cory Klippsten of bitcoin exchange service Swan Bitcoin and Pierre Rochard of Kraken to its advisory board.
* In November 2020, former Ontario legislator Remo Mancini resigned from the board of directors after being appointed in 2018.
* Jappa brings strong knowledge of the mining industry to Riot’s board, with his company having placed over 45MW for hosted clients and sold over 200,000 ASIC miners since its founding in 2017.
Coinbase Invests In US-Based Mining Firm Amid Industry Diversification Efforts
Titan secured funding from Coinbase to offer a U.S.-developed software suite for miners.
Coinbase Ventures, the investment arm of the major crypto exchange, has invested an undisclosed amount into Titan, a developer of software and services targeted at industrial Bitcoin (BTC) mining.
According to Titan’s announcement, the investment will help continue development of the company’s products and improve efficiency and profitability of Bitcoin mining companies.
Ryan Condron, co-founder and CEO of Titan, said that “mining has advanced from hobby, to industry, to critical global computing infrastructure, and Titan is prepared to help world-class miners meet these challenges.”
Titan offers advanced pool and mining software targeted specifically for professional U.S.-based miners. Its network of nodes and mining dashboards allows miners to better compete on a global scale, according to the company.
Previously, Titan launched the Titan Pool in collaboration with CoinMint and CoreScientific, two major mining infrastructure providers in the U.S. Among the benefits offered by the pool, Titan cites better transparency and, crucially, solving some jurisdictional issues for U.S. miners.
China currently accounts for the vast majority of the Bitcoin hashrate. The relative dominance can be attributed to a combination of attractive electricity costs and a localized supply chain.
The Sichuan region is particularly attractive for miners due to its cheap hydroelectric power. Its importance is so pronounced that local seasons have a strong effect on Bitcoin’s hash rate. But cheap electricity is not unique to China, with some regions in the U.S., Canada and Europe being just as competitive.
The mining supply chain, on the other hand, sees a much stronger dominance of Chinese companies. Mining hardware manufacturers are almost exclusively based in China. This gives local miners a powerful home field advantage, as there may be difficulties in exporting and importing certain chips and devices. Though the U.S. is catching up in terms of mining hash rate, accounting for 14% of the total, local firms are still using Chinese-made devices.
This may be particularly problematic in today’s geopolitical environment, where the U.S. is actively banning Chinese-made products and services, and going as far as prohibiting investment in Chinese companies. The mining industry has already begun responding, with some operators repatriating hash rate.
Though the departure of President Trump may help ease tensions somewhat, some analysts believe that there may be no reset in sight for the U.S.-China relations.
Titan is primarily focusing on the software side of the mining supply chain, offering a national pool for miners to join. There have also been some developments in local maintenance infrastructure, with Bitmain offering technician certification courses in the U.S. in May 2020.
Interest in diversifying the mining industry away from China’s dominance appears to be high, but full independence is unlikely to be achieved until ASIC manufacturers from other countries step in.
Nvidia May Restart Production of Crypto Mining GPUs If Demand Sufficient
Selling dedicated crypto cards would alleviate pressure on Nvidia’s consumer models.
Chip-making giant Nvidia could potentially restart production of dedicated graphics processing units (GPUs) for cryptocurrency miners, according to its executive vice president and chief financial officer, Colette Kress.
* Speaking at an event on Jan. 12, Kress said if demand in the cryptocurrency market picks up to a “meaningful” level, the company could again start selling the specialized cards called CMPs, according to a SeekingAlpha transcription.
* CMPs are GPUs with the video outputs removed, allowing them to be made and sold more cheaply.
* Currently, Nvidia’s RTX 30-Series GPUs are popular with miners, though Kress said, “We don’t believe [mining demand is] a big part of our business today.”
* However, “gaming demand is very strong, and we think that’s larger than our current supply,” she said.
* With the RTX 30-Series supply to stay tight until at least the end of Q1 2021, relaunching CMPs could alleviate pressure on the consumer product line.
* While bitcoin miners use specialized and more costly processors called ASICs, other cryptocurrencies like Ethereum’s ether can be mined with GPUs.
Why Pakistan And The Middle East Can Bet On Crypto Mining
By embracing crypto mining activities in the region, Pakistan and Iran may give other nations in the Middle East an example to follow.
It is especially important for countries to become more aware of cryptocurrencies, especially with components like decentralized finance rising in prominence. Now that the Middle East is becoming more mining-friendly, the future suddenly looks bright once again for this region.
Pakistani Administration Legalizes Crypto Mining
The Pakistani government appears to be moving quickly toward a pro-crypto stance. Following a commitment to integrate Bitcoin (BTC) into its financial system last December, the country is taking steps to legalize mining.
Sumera Shams, a member of the provincial assembly in Khyber Pakhtunkhwa, announced on Twitter that the body had voted to pass a law legalizing mining:
Khyber Pakhtunkhwa is one of the major provinces in Pakistan. It is located in the country’s northern region and is a driving force behind the country’s development. According to further confirmation from Zia Ullah Bangash, chief advisor on science and information technology to the region’s chief minister, the area voted to legalize mining.
Local news sources claimed that the assembly had passed a draft legislation showing a commitment to embrace what could possibly be the future of money. Legislators explained that they believed cryptocurrencies would replace fiat currencies eventually and that it is important for them to be at the forefront as this development comes.
By embracing mining, they hope to usher in the next financial revolution. The bill passed in a unanimous vote, showing that legislators were indeed looking forward to bolstering their digital and financial spaces.
Waqar Zaka, an influencer and pro-crypto activist, tweeted that this was “one province done, three more to go.” While this doesn’t mean that all of Pakistan has embraced mining, it is indeed a step in the right direction.
It is unclear how the northern region wants to move forward with its mining strategy. However, it should be able to develop a robust regulatory regime that will encompass the entire industry and allow for investment to flow.
Iran Doubles Down On Mining
Pakistan is not the only country in the Middle East that is moving quickly toward the legislation of mining. In fact, it currently trails Iran in that regard.
Iran’s embrace of crypto mining has been swift. The country initially outlawed the activity after noticing that citizens had begun operating mining outfits in mosques. Most mosques get electricity subsidies from the government, and these miners had set up their operations to ensure that they would profit from it.
The situation was particularly dire because crypto had started gaining traction in Iran at the time. Sadly, it turned sour when the government began to seize mining equipment found in mosques. A report on the issue claimed that Mostafa Rajabi Mashhadi, an official at the Iranian Ministry of Energy, pointed out a 7% jump in the consumption of electricity in June 2019.
Mashhadi reportedly added that crypto miners had been responsible for the rise in consumption levels. So, the government chose to take preventive steps to avert any issues with Iran’s power grid. He pointed out that the government will identify miners and immediately cut them off the power grid — until all parties reach a reasonable agreement over pricing policies for miners.
In November 2018, Iran was ranked on top of the global energy subsidy list, providing up to $45.1 billion annually. That figure represented a 10th of its annual gross domestic product that year. Considering that Iran had been dealing with stringent economic sanctions from the United States government and the international community over its nuclear program, it couldn’t afford to pay more in subsidies.
However, these same policies have forced the country to rethink its policies. In July, the Iranian government officially ruled to declare crypto mining an industrial activity in the country. A report from the Mehr News Agency stated that the government had held a cabinet meeting, chaired by President Hassan Rouhani.
The legalization essentially made mining an official industry. At the same time, individuals and businesses looking to engage in the activity would need to get licenses from the Ministry of Industry, Mine and Trade.
It was a perfect match. Electricity prices are pretty cheap in Iran. Statistics from Global Petrol Prices at the time showed that the country charged almost $0.005 per kilowatt-hour. Considering that this is much better than what other countries charge, it is no doubt that this will be lucrative.
So far, over a thousand individuals and entities have jumped into the Iranian mining space, taking advantage of the cheap electricity. In return, the country has enjoyed a boost in revenues and taxes. The economic sanctions from the United States and the international community have continued to grow, and this means that the country is strapped for cash. With a fledgling industry like cryptocurrency mining, it can offset some of these costs.
It is unclear whether any countries in the Middle East will join the fray anytime soon. Saudi Arabia is growing to be the blockchain hub, although most of its efforts have been aimed at using the technology to improve its government and private industries. With the prospect of crypto legislation rising there, there is no reason why mining can’t become more of a recognized activity as well.
Crypto Winter: Bitcoiners Use Mining Rigs As Heaters As Temperatures Drop
Bitcoiners have been using the excess heat produced by their mining rigs to stay warm this season.
Bitcoiners mining cryptocurrency at home this winter have been staving off freezing temperatures by putting them to good use as heaters.
According to the Wall Street Journal, crypto miners in France and the United States report their overall heating costs have dropped — even if the temperature in their homes often gets far above what they’d prefer.
Thomas Smith, a photographer based in California, has been using mining rigs to heat his home since at least 2019. He’s also been exploring some novel uses, including employing the miners to warm up his two chickens in an outdoor coop and to grow tomatoes in his greenhouse as temperatures started plunging at night.
It’s not the first time the idea has been implemented, with reports in 2018 that the co-founder of Czech cryptocurrency exchange NakamotoX had been growing ‘cryptomatoes’ in five-acre greenhouse using the excess heat from crypto mining.
“My greenhouse is 24 cubic feet, so putting in all the heat from the cryptocurrency-mining computer would increase its temperature by around 40 degrees,” said Smith in the WSJ. “Even in the dead of winter — with a nighttime temperature of 45 degrees — that would still push my tomatoes to their 85-degree limit. On warmer nights, it would risk roasting them on the vine.”
“I’ve experimented with heating my home using cryptocurrency-mining waste heat on a small scale, with a good deal of success”
Before the pandemic, when many were allowed to live on university campuses in the United States, students reported mining with “free” electricity provided by the schools, which helped them cover utility bills. One dormitory resident advisor said at the time that instead of using a space heater in the winter, he would simply mine crypto.
But before you rush off to save on heating bills with a crypto mining rig, remember that it’s difficult to take advantage of mining many cryptocurrencies at home as the cost of electricity often makes using personal computers to generate blocks financially prohibitive, especially for ultra-competitive currencies like BTC.
Cryptocurrency Miners Find Their Souped-Up Machines Make Dandy Warmers For Rooms, Greenhouses, Chicken Coops
As winter approached, Dan van der Ster worried his annual utility bill would skyrocket since his family of five was homebound with the pandemic.
It hardly budged.
While the electric portion shot up in 2020, the gas-heat expense surprisingly declined. He thinks that’s largely thanks to the beefy new computer he uses to mine cryptocurrency and on which his teenage son plays videogames.
Mr. Van der Ster, a 40-year-old engineer who lives in France near the Switzerland border, now has a new concern: “It’s getting too warm.”
With the health crisis keeping people home, computer gamers and bitcoin miners are taking greater advantage of a cold-weather perk. The more they use their high-powered machines, the more heat the devices give off.
In the pandemic’s early days, photographer Thomas Smith funneled heat through a tube from a computer he uses mainly for mining bitcoin to maintain a small greenhouse in his garage. It yielded fresh basil and heirloom cherry tomatoes.
“It was like those heaters on a restaurant patio,” he said. “I made a caprese salad.”
Now Mr. Smith, who lives in Lafayette, Calif., is experimenting with using his computer to heat at night a coop he recently set up in his backyard for two chickens. “It’s chilly out there,” he said, though he is concerned about the birds’ safety. “I don’t want to overheat them.”
Rebecca Ratchford hasn’t had to raise the thermostat this winter in her three-bedroom Cary, N.C., home, where she has been working remotely as an administrative assistant since the pandemic began. Her custom-built computer gives off plenty of warm air, she said, especially during intense battles in “Destiny 2,” the science-fiction shooter game.
“When a raid is going on, my PC is struggling,” said Ms. Ratchford, 27, which means it will work harder—and pump out more heat—to keep up with the action.
In warmer months, the machine’s excess heat will usually prompt her to crack open a window, though she generally doesn’t mind the temperature changing. Her Snowshoe cat Yachi loves it and often naps alongside her computer, while her mixed-breed dog Dash has a seasonal affection for the heat, usually in the winter.
How warm a high-performance computer can get depends on the type of cooling and other components in it, and what it is used for and how long, said Matthew Justice, a software engineer and author of “How Computers Really Work.” It could make a large, spacious home just a little bit toastier, he said, or turn a small one with minimal ventilation into a sauna. The problem is acute for gamers and miners in warm climates, he said, as both tend to use their pricey machines year-round.
Coping with the heat is a hot topic on a forum dedicated to computer gaming on the social-media platform Reddit, though mostly in the summer, said Jesse Zmick, 30, one of its moderators. Aside from making under-the-hood upgrades to components that keep the machine from overheating, he often recommends simply investing in a good desk fan to improve airflow.
“Fans are your friend,” he said, adding that sometimes extra steps may be necessary. During the summer, “I’ll strip down to shorts and a T-shirt if I’m playing an extended session,” said Mr. Zmick, a help-desk assistant in Charlottesville, Va., adding that the air-conditioning system in his apartment is subpar. “But in the winter it’s quite nice.”
Fast-food company KFC recently co-developed a gaming computer with a chamber for keeping its chicken warm. “Never risk letting your chicken go cold again,” reads a promotional website from the Yum Brands Inc. unit, which made the machine in partnership with hardware manufacturer Cooler Master Co.
KFC hasn’t announced a price or release date for the “KFConsole,” but a representative said the device is “a real-life product.”
Some people rely on powerful computers for mining digital currency such as bitcoin, whose value has more than quadrupled from a year ago. Miners and gamers tend to butt heads trying to get hold of new graphics cards—essential computer parts that generate lots of heat—which are often in short supply.
In Portugal, the home in the fishing village where Jon Standen is staying lacks a built-in heating system. As a tester of graphic cards for a living, he said, he is fortunate because his high-end computer is doing a good job of filling the gap.
“It’s essentially a 350-watt heater,” said the 40-year-old, originally from London, adding that lately a cold snap has brought the temperature at night down to around 37 degrees Fahrenheit. The computer, he said, “puts a lovely warm draft of air across my desk and my keyboard so I can keep typing.”
Kyle Burger, 25, is leaning on his gaming rig to help warm his drafty one-bedroom Chicago apartment this winter. “It’s better than a space heater,” he said, “because you can’t play games on a space heater.”
A financial-product designer temporarily working from home, Mr. Burger thinks his computer runs hotter than most because it is about eight years old. It has to work hard to support even games that don’t have complex graphics, he said: “With every new game I get I feel like I’m flying closer to the sun.”
Austin Evans, a YouTube creator in Los Angeles, last year made a video in which he fried an egg atop a gaming computer he purposely assembled without the kind of cooling features most machines have for safety and performance. “It was a little runny on the top,” he said, “but the bottom was white and tasted good.”
Mr. Evans, 28, doesn’t recommend that people attempt the same at home, even with a properly built computer. “It’s not practical for any kind of long-term use, but it was an interesting experiment,” he said. “It technically does work.”
Genesis Mining Head Forecasts Importance Of Layer-Two Bitcoin Solutions
He feels Bitcoin might need such solutions, even with the coin in a store of value role.
Would Bitcoin and its blockchain be able to handle mainstream adoption as a store of value without requiring second-layer solutions? Genesis Mining’s head of mining operations, Philip Salter, holds a mixed view.
“I think Bitcoin is a good store of value regardless of transaction fees,” Salter told Cointelegraph. “The issue is — the higher the fees are the larger is also the minimum value that can be efficiently transferred.”
Bitcoin (BTC) has stood the test of time up to this point, with BTC maintaining its place as the crypto industry’s highest market cap asset for the past 12 years. Bitcoin is seen as more of a store of value than digital cash these days, however, and Salter thinks complications may still arise from this shift in perceptions:
“Some years ago it was possible to store and transmit $1 efficiently, since tx fees were effectively zero. Currently, sending a transaction can easily cost $15, so it is not sensible to transmit $1 any more. If this trend continues due to more use of BTC and higher BTC prices, it will become prohibitive to transfer value in common amounts and it will be only an effective store of value for very large amounts.”
“That’s why I think that 2nd Layer solutions are a necessity not only for the use of BTC as a currency but also for the long term feasibility of BTC as a store of value,” Salter added. Industry players have worked on layer-two scaling solutions, such as Lightning Network, in an effort to facilitate small transaction capabilities.
Salter himself uses Lightning Network solutions for his own Bitcoin endeavors. “I personally upgraded my personal phone wallet to a lightning-only wallet (Phoenix), so that I can even in these crazy times pay with coins quickly and cheaply,” he said. “To anyone who tried to use lightning two years ago and found it confusing, I strongly suggest that you give it another try now that it’s far more established and user friendly to use.”
Bitcoin’s scaling debate was a focal point of discussion in 2017 and 2018. In September 2020, MicroStrategy said it faced no major issues during one of its BTC accumulations. The firm bought 38,250 BTC using a combination of off-chain and on-chain avenues.
Bitcoin Miners Facing Chip Shortage Amid Skyrocketing Demand
Bitcoin miners are scrambling to acquire more mining rigs as the global semiconductor shortage worsens.
A chip shortage is significantly affecting the Bitcoin mining hardware distribution chain, according to Reuters on Friday.
Indeed, Bitmain — one of the major Bitcoin miner makers — has seen its inventory sold out until August 2021, according to information on its website. Apart from being out of stock, Bitmain’s mining rigs are now at a massive price premium.
For instance, back in November 2020, the Antminer S19 shipped for $1,897 per unit. As of the time of writing, the same miner is priced at $2,767 on the company’s website — a 45% markup.
Speaking to Reuters, Alex Ao, vice president of semiconductor manufacturer Innosilicon, said, “There are not enough chips to support the production of mining rigs.”
What little supply is available is reportedly being scooped by major mining establishments in North America. Back in 2020, United States-based mining giants like Riot Blockchain, Bitfarms and Marathon significantly upscaled their inventory with massive purchases from Bitmain and rival MicroBT.
These capacity expansions occurred even as Bitcoin went through its quadrennial halving that saw block reward subsidies cut in half. Thus, while China still dominates the global hash rate distribution, North American mining interests are reportedly “squeezing supply to China.”
Chinese miners have also suffered notable disruptions of late including a frozen-card tide back in 2020 that prevented some operations from being able to pay for electricity. As previously reported by Cointelegraph, authorities in China’s Yunnan province also shut off the power supply to miners in the region.
Smaller mining operations are also in danger of being priced out of the market. Premiums on hardware, even for second-hand rigs, on top of the reduced block rewards could significantly impact their bottom lines.
Already, other industries dependent on semiconductors are beginning to feel the effects of the continued shortage. Car manufacturers such as Ford have announced shutdowns of some of their plants.
More Institutional Adoption As Marathon Patent Group Purchases $150M In Bitcoin
CEO Merrick Okamoto said the crypto purchase would help make Marathon an appealing choice to investors seeking “exposure to this new asset class.”
Nevada-based crypto mining firm Marathon Patent Group has invested $150 million in Bitcoin as a reserve asset.
Marathon announced today that it has purchased more than 4,812 Bitcoin (BTC) for $150 million through the New York Digital Investment Group — an average price of $31,168 per coin. Chairman and CEO Merrick Okamoto said the move was “a better long-term strategy than holding US Dollars,” comparing the Bitcoin purchase to companies like MicroStrategy, the business intelligence firm that made an initial $425-million crypto investment last year and has since bought more coins.
“By purchasing $150 million worth of Bitcoin, we have accelerated the process of building Marathon into what we believe to be the de facto investment choice for individuals and institutions who are seeking exposure to this new asset class.”
The company expanded its operations significantly in 2020 in an apparent effort to become North America’s largest Bitcoin miner, installing Whatsminer M30S+ ASICs in June 2020 and purchasing 10,000 Antminer S-19 rigs in October 2020. Okamoto said that Marathon was expecting to have more than 100,000 miners “delivered and fully deployed” by the end of the first quarter of 2022.
“If all miners were operational today, based on the Bitcoin network’s current difficulty rate, we would produce approximately 55-60 bitcoins per day,” the CEO said. “However, by leveraging our cash on hand to invest in Bitcoin now, we have transformed our potential to be a pure-play investment into a reality.“
The crypto mining firm bought the dip, as its Bitcoin purchase reportedly came just before the coin rose back above $34,000 after falling below $30,000 last week. At the time of publication, the price of Bitcoin is $34,461, having risen more than 7% in the last 24 hours.
Blockstream Buys $25M Worth of Bitcoin Mining Machines From MicroBT
The ASICs are set to be deployed in Blockstream facilities through the U.S. and Canada.
Bitcoin technology company Blockstream said it bought $25 million worth of mining machines from MicroBT to expand its mining operations.
* The machines are to be deployed through Blockstream’s facilities in Canada and the US. When the company expects to receive its ASICs was not specified.
* In 2019, Blockstream launched Blockstream Pool and announced that it had been previously mining for a select few high-profile clients like Fidelity.
* Blockstream has over 300 megawatts in mining capacity available, said CEO Adam Back in a statement. “We’ll continue to grow aggressively throughout the year,” he said.
Time For A Crypto GPU? Gamers And Miners Spar Over Scarce Top Hardware
New GPU cards for mining are on the way, but the demand is too great. So, what are manufacturers doing to solve the shortage?
The rise of cryptocurrencies over the past few months, especially with the onset of 2021, has certainly catapulted the crypto niche into the mainstream. While traders buy and sell and try to calculate how much this or that currency has grown by and as large investment funds predict that Bitcoin (BTC) will soon reach $100,000 per coin, big things are also happening in the crypto mining space.
Miners in the largest pool, F2Pool, reportedly contributed to the recent fall of BTC price and then to its subsequent recovery, while individual miners from the United States and France are even heating houses in winter with their machines.
This indeed suggests that Bitcoin is one of the lifelines of the industry, especially with 2021 promising to be a year filled with new crypto mining products, especially video cards.
AMD On The Scene
At the end of 2020, several new products were expected from the two largest GPU card manufacturers, Nvidia and AMD, and it didn’t take them long to deliver. During the annual CES technology conference at the beginning of January, the manufacturers did not present the final versions of their GPU cards but confirmed that they will arrive on shelves very soon.
Users will be interested in the AMD Radeon RX 6700 and RX 6700 XT cards, which are intended to replace the Radeon RX 5700 and RX 5700 XT cards. This new series is interesting because according to some experts, the RX 6700 will be able to outperform its competitor and undisputed leader among miners, the Nvidia GeForce RTX 3060 Ti.
The new card can support up to 12 GB of GDDR6 memory, a powerful cooling system — like the GeForce RTX 3070 has — a 192-bit memory bus and 96 MB of Infinity Cache memory. An important factor for the popularity of the card will be the price, and because it’s reportedly cheaper to produce than the GeForce RTX 3060 Ti, the retail price is expected to be lower.
Why then can the RX 6700 be a success? Before purchasing a GPU card, miners look at the profitability of the cards — but here, AMD has problems. Of the 10 most profitable cards, almost all positions are occupied by Nvidia products. Of course, there is the AMD Radeon VII, which is very good, but when talking about cards that occupy the middle price category of $400 to $500, AMD is not in a strong position. This is why the RX 6700 series can possibly become a contender for the top five video cards of 2021.
A Special Product From Nvidia
What about Nvidia? Unfortunately, the company has yet to unveil a launch plan for a new card, perhaps because the RTX 3000 series just came out and is breaking all demand records, leading to a shortage of cards. Even before the new year, the new RTX 3080, 3070, 3060 Ti and 3090 were hard to find, even at several times their retail prices. The company admitted that this problem will likely not be resolved until April or May.
The RTX 3000 series is so popular because they are the most profitable cards for mining. According to some estimates, one GeForce RTX 3080 card can bring in $6 to $9 per day when mining Ether (ETH), and investments can be recouped in just two to six months — not bad for today’s network complexity.
But the manufacturer can get out of the crisis in a fairly simple way: Make cards specifically for miners and thus reduce the demand for the RTX 3000 series and end the struggle between gamers and miners.
Recently, the chief financial officer of Nvidia said that if demand from miners continues to grow, then the manufacturer may resume the production of the crypto-mining processor series. At the moment, the decision regarding their production has not yet been announced, which is understandable, as the previous generation of such cards in 2017 to 2018 was not widespread and the manufacturer fears another failure.
But that time, Nvidia presented special equipment for mining rather late, when many were already mining on readily available cards. Additionally, the timing was bad, as the wave of interest in crypto began to subside and the market entered a prolonged bearish period. This time, if Nvidia does a quick job of it and manages to release the cards within the next six months, then these cards may still come out while there is an ongoing shortage for the RTX 3000 series.
While Nvidia is cautious regarding announcing its own new mining cards, other manufacturers are starting to produce mining video cards based on the Nvidia architecture. MSI recently registered several products with the Eurasian Economic Commission — the main regulatory body of the Eurasian Economic Union, which consists of Belarus, Russia, Kazakhstan, Armenia and Kyrgyzstan — including the MSI GeForce RTX 3060 Ti Miner 8G and 8G OC GPU cards, which are designed specifically for mining.
Of course, this registration does not necessarily mean that the company will release these products, and it does not reveal a possible launch date, but this step clearly means that some manufacturers are interested in catering to the needs of miners and are determined to release very specific solutions.
Gamers vs. Miners
The fact is that while there is no special, up-to-date equipment for mining, all users end up buying the same latest cards, which operate well in both scenarios. For gamers, the main indicator of the quality of a card is the frame rate per second it achieves when playing the newest game at the maximum video settings.
The leader among gamers right now is the new Nvidia RTX 3090, which achieves 152.7 fps. A more popular card is the Nvidia GeForce RTX 3080 with 142.1 fps, which costs about $700 and works on the improved Ampere architecture. The only problem is that this card is as hard to find as a Sony Playstation 5.
But gamers should not be discouraged because there are signs that manufacturers are generally moving toward dividing equipment into mining and gaming. Nvidia announced that in February, the GeForce RTX 3060 will be released for sale and come equipped with 12 GB of GDDR6 video memory.
These cards will only be issued by Nvidia partner companies. Hong Kong-based Zotac has already presented two versions of the cards. The main thing that should please gamers is that they will not be powerful enough for mining and will only be suitable for games.
There’s No Consensus
It seems that for the near future, unfortunately, miners should be looking out for any GPU available on the market and cease hoping to strike gold by buying the latest and greatest. Ilya Goldberg, managing partner of Ecos-M — which operates a cloud mining center — said that 2021 will likely go by without any major shocks for the mining industry:
“As far as we know the main global hardware vendors have not purchased many chips for this year. Most likely, the new equipment will be released in the spring–summer of 2022. Therefore, we expect that this year the network hash rate will not grow much, and the profitability for miners will be good.”
Anyways, there is no need to fall into despair, as hardware manufacturers are evidently taking steps to meet the demand of all consumers — miners and gamers — which means that slowly but surely they are recognizing the power and demand of mining and are looking to deliver products for the industry.
California Pension Fund ($441 Billion) Loaded Up On RIOT Shares During Bitcoin’s Q4 Rally
The largest public pension in the U.S. bought more RIOT shares for the first time since 2017.
California’s $441 billion public pension fund increased its stake in bitcoin miner Riot Blockchain (RIOT) nearly sevenfold in last year’s Q4 amid the meteoric run-up in the price of bitcoin.
* California Public Employees’ Retirement System (CalPERS) held 113,034 shares in RIOT worth over $1.9 million at the end of 2020, according to Tuesday filings. That’s up from Q3 2020, when CalPERS’ 16,907 RIOT shares were worth a comparatively minuscule $49,000.
* The largest public pension fund in the U.S. had been holding firm on its nearly 17 thousand RIOT shares since acquiring them during the bull run in late 2017. That position seldom varied until now.
* RIOT spiked 541% during Q4 2020. Meanwhile, bitcoin was up 174% for the quarter.
* CalPERS board members included blockchain technologies as a future-forward investment opportunity during a public forum in 2016.
Bitcoin Miners Saw Revenue Rise 62% In January From December
Miners earned over $1.1 billion in January.
Bitcoin miners generated an estimated $1.1 billion in revenue in January, up 62% from December, according to on-chain data from Coin Metrics analyzed by CoinDesk.
The surge in revenue came as bitcoin‘s price climbed from $29,000 to just below $42,000 in the first half of the month before levelling off through the last two weeks.
Revenue estimates assume miners sell their BTC immediately.
Measured by per terahash per second (TH/s), miner revenues bounced between $0.20 and $0.27 for most of the month after peaking near $0.32 early in the month, per data from Luxor Technologies.
Network fees brought in $116 million in January, or over 10% of total revenue, a slight percentage increase from the 9.8% of revenue represented by fees last month. Fee revenue hit its highest mark since January 2018, per Coin Metrics data.
Fees measured in dollars were quite volatile in January, with average transaction costs bouncing between $5 to above $16 throughout the month, per Coin Metrics.
Notably, fees as a percentage of total revenue continues a strong upward trend since April, prior to the network’s third-ever block subsidy halving in May. Increases in fee revenue are important to sustain the network’s security as the subsidy decreases every four years.
Despite calls by some investment professionals like Guggenheim’s CIO Scott Minerd that bitcoin’s price is currently too high, miners eye a continued phase of strong revenue. Around the world, bitcoin miners continue buying more mining machines and are beginning to receive and deploy ASICs pre-ordered last year as they act on plans for continued expansion.
The Institutionalization Of BTC: Mining May Be More Profitable Than Buying
Regardless of Bitcoin’s price or future economic scenarios, Bitcoin mining will be a profitable activity.
For years, institutional investors have been watching Bitcoin from afar with bewilderment and amusement, but with little to no participation. Although they were attracted by the high returns, they were scared away by Bitcoin’s infancy, lack of rules and the myriad headlines warning of hacks, bankruptcies and scams.
In its early years, Bitcoin (BTC) lacked the on- and off-ramps required for most institutional investors, making it virtually impossible to get approved by any corporate investing mechanism.
Pre-2017 Bitcoin Investing
But a strange thing happened in the rally of 2017. As institutions were saying it’s too risky at the corporate level, many of the insiders were buying Bitcoin personally in every way they could.
They purchased Bitcoin through exchanges, Bitcoin ATMs and participation in initial coin offerings. Many of these individuals become passionate, even obsessive, about Bitcoin, and with them, Bitcoin began digging its roots into the financial world.
Post-2017 Bear Market
During the bear market that followed the 2017 rally, a huge number of Bitcoin products were created and launched specifically for institutional investors. Publicly-traded Bitcoin mining companies started providing investors with exposure to the most fundamental part of the industry.
Bitcoin holdings were securitized so that investors on major exchanges could freely speculate on Bitcoin’s price without setting up and using Bitcoin wallets. Companies started taking on debt to buy and hold Bitcoin because speculating the long term appreciation on Bitcoin is worth more than the interest on the debt.
Bitcoin’s Response To COVID-19
When Bitcoin fell and bounced off its approximately $4,000 low in March of 2020, the global COVID-19 pandemic was just getting started. Governments around the world largely followed the same strategy — lock people down and print more money.
Lockdowns, quantitative easing and fiscal stimulus were normalized before markets could fully digest what was happening.
Markets became inefficient pricing mechanisms not because participants were acting in bad faith but because participants were acting only on faith — on faith that things couldn’t continue like this for much longer.
As cash came in daily, the market reacted almost daily without looking for valuable parking spots for their capital. The market was competing with itself on how much and how fast capital could be parked. What does a logical person invest in as nearly every economy and industry in the world shrinks and world equity prices are soaring to record highs?
Buying And Holding Bitcoin In 2020
This time, everything was already in place for investors when they began to pay attention again. There were securitized products, on/off ramps, precedence, experience and many passionate supporters inside major institutions. Most important of all were the on/off ramps.
For the first time in cryptocurrency’s history, investors were able to use their normal tools and exchanges to invest in Bitcoin safely, easily and without any special approval. With proper mechanisms in place, companies and investors did what most investors should do: buy and hold.
In the real world, the simplest solutions are usually the best. This makes intuitive sense as it seems to embrace other seemingly natural laws of life, such as the 80/20 rule or the inevitability of death and taxes.
This is true in Bitcoin as well. While there are many ways to make large amounts of money off Bitcoin, mining, day trading, speculating, etc., for most people around the world, regardless of who or where they are, the best investment strategy has simply been to buy and hold Bitcoin.
The Reason For This Is Clear: Anybody can buy and hold Bitcoin, but almost nobody can beat the market forever. The industry is simply growing at such a tremendous pace that no one can keep track of everything that is happening now, let alone forecast the future. You have to live and breathe crypto for a chance at beating the market odds. Even so, we have seen true legends in this space completely wiped out by thinking they can do better than just holding their Bitcoin.
Why BTC Mining Is More Profitable Than Just Holding
In the history of Bitcoin, mining has been the clear exception to the rule of “buy and hold.” If you can create a scenario with the optimal blend of cheap energy and efficient mining hardware, Bitcoin mining will be a profitable activity in almost any economic scenario and at any Bitcoin price point.
To prove this, we ran an opportunity-cost comparison with buying Bitcoin or buying a Bitcoin miner the day it was announced from Bitmain, operating it at $0.06 and selling enough Bitcoin to pay your electricity bills.
In every scenario, you end up with more Bitcoin from mining than holding.
This one simple economic incentive has in just seven years bootstrapped the Bitcoin mining industry into a $5-billion industry today; done right, mining is one of the most predictable and safe ways to turn your Bitcoin into more Bitcoin.
Of course, “done right” assumes one very important thing: that you will reliably and consistently operate this equipment. This is often a lot easier said than done. Bitcoin mining can be highly technical: the equipment is sparse and highly varied in its quality, performance and condition.
Also, like any piece of equipment, it needs the right operating environment and skilled operators and systems to run well and cost-efficiently.
From the network’s perspective, Bitcoin doesn’t care how well or cost-effectively you mine. One terahash coming from a desert is equally valuable and indistinguishable from one terahash coming from snowy Quebec. But you as the owner will surely notice the cost difference on your bottom line, one thing is for sure: No one is in the mining business because they want less Bitcoin.
It doesn’t take a genius to make money mining in a bull market, however, it does take a genius to plan for and survive a bear market. When we brought Bitfarms to the Toronto Stock Exchange in 2018, we were surrounded by a number of large peers, most of whom did not survive to this point.
Those of us who did survive the bear market have come out stronger, more experienced and better operators with operations and equipment ready to capitalize on the 2021 Bitcoin rally and survive whatever market that follows it.
Bitcoin Mining On Track To Consume All Of The World’s Energy By 2020, Says Newsweek
By Anthony Cuthbertson On 12/11/17
A network that underpins the virtual currency bitcoin is projected to require all of the world’s current energy production in order to support itself within three years, according to estimates.
The amount of power necessary to support bitcoin has increased significantly in recent months, as its price has surged to record levels. On Monday, one bitcoin was worth around $16,500—a twentyfold increase since the start of 2017.
Bitcoin mining—the process of generating new units of the currency by confirming bitcoin transactions on an online ledger called the blockchain—requires computing power, which is used to solve the complex mathematical puzzles used in the mining process. These problems are designed to become more complicated as more computers join the cryptocurrency’s network.
Analysis of how much energy it currently requires to mine bitcoin suggest that it is greater than the current energy consumption of 159 individual countries, including Ireland, Nigeria and Uruguay. The Bitcoin Energy Consumption Index by cryptocurrency platform Digiconomist puts the usage on a par with Denmark, consuming 33 terawatts of electricity annually.
“As mining can provide a solid stream of revenue, people are very willing to run power-hungry machines to get a piece of it.
Over the years, this has caused the total energy consumption of the bitcoin network to grow to epic proportions,” Digiconomist explains in a blog accompanying the index.
The bitcoin network’s energy consumption has increased by 25 percent in the last month alone, according to Digiconomist. If such growth were to continue, this would see the network consume as much energy as the U.S. by 2019, and as much energy as the entire world by the end of 2020.
Such a projection is purely hypothetical, and for it to be realized it would require bitcoin to continue its remarkable growth trajectory and for global energy production to remain stable. A similar estimate created by ZeroHedge in November put the date as early as February 2020, though this was when bitcoin’s growth was even steeper.
There has also been debate as to how accurate Digiconomist’s figures are. Cryptocurrency investor Marc Bevand suggests the index overestimates the electricity consumption of bitcoin miners by 1.5 to 3.6 times.
Going by Digiconomist’s estimates, bitcoin’s annual carbon footprint is close to 16,000 kilotons of carbon dioxide. This is largely as a result of the bitcoin network being mostly fueled by coal-fired power plants in China.
But while computer server farms in warehouses are most commonly used to mine the cryptocurrency, cyber criminals have recently turned to botnets in order to exploit the processing power of victims’ computers.
More than half a billion people may be inadvertently mining cryptocurrencies from their computers, smartphones and other devices, according to research conducted earlier this year by ad blocking firm AdGuard.
Hidden software was found embedded within 220 popular websites, which have an aggregated audience of over 500 million people. The mining tool hijacks a computer’s central processing unit (CPU) and uses it to run mining software in the background.
Websites including Showtime and the torrenting site The PirateBay have been found to include such software, while researchers say the trend is likely to continue as incentives increase with the price of bitcoin.
“How much money have these websites made? We estimate their joint profit at over $43,000,” the AdGuard researchers said in an October blogpost that detailed their discovery. At the time, one bitcoin was worth around $5,000.
“Right now it’s not millions, but this money has been made in three weeks at almost zero cost…this analysis well illustrates the whole web, so it’s safe to say that one of every 40 websites currently mines cryptocurrency.”
BTC Miners Pocket $4M In 60 Minutes, The Highest Hourly Revenue In Bitcoin’s History
Bitcoin mining fundamentals are growing stronger as miners are making a killing from higher BTC price.
According to data from Glassnode, Bitcoin (BTC) miners made over $4 million in just under an hour on Feb. 12, making it the biggest hourly revenue in history.
In May 2020, Bitcoin underwent the third block reward halving in its history, cutting the amount of new Bitcoin mined in half.
* After a block reward halving, the amount of BTC miners can mine using computing power decreases by half. Hence, miner revenues decrease by 50% overnight, which could cause strain on mining operations in the short term.
At the same time, the hash rate of the Bitcoin network is also at new all-time highs with the fourth consecutive upward difficulty adjustment by roughly 2.5% expected in seven days.
So Why Are Bitcoin Miner Revenues Surging?
A block reward halving occurs every four years to decrease the rate the remaining supply of Bitcoin is introduced to the market.
As Bitcoin nears its fixed supply at 21 million, the pace at which new BTC is mined is reduced through a halving. But the halving can put immense pressure on miners that depend on the BTC they mine to cover operational costs in the short term.
Theoretically, when a halving occurs, the price of Bitcoin is expected to rise because of the lower supply of new coins entering the market. Therefore, a higher BTC price can make up for the lower number of BTC miners are rewarded with for mining a block.
This week, Bitcoin miners generated the biggest hourly revenue in history, despite mining half the BTC they used to mine compared to last year.
This shows that Bitcoin is working as designed with its value increasing following the block reward halving, incentivizing miners to increase their hash rate and invest in the security of the network. Analysts at Glassnode said:
“#BTC miners just made over $4 million in a single hour – the highest hourly miner revenue in Bitcoin’s history so far.”
Another reason behind the rising miner revenue is the increasing number of transactions on the network and the accompanying fees paid to miners as a result. Miner revenue is comprised of the transaction fees plus the block rewards collected by miners, with the former comprising roughly 13.5% of the total revenue, according to data from Clarkmoody.
Will Miner Revenue Continue To Increase With BTC Price?
PlanB, a pseudonymous Bitcoin researcher behind the popular price model Stock-to-Flow (S2F), said Bitcoin is on track to reach $288,000.
The S2F model largely relies on BTC’s supply (the stock) and the new Bitcoins mined (the flow), predicting the price trend of BTC based on its scarcity. PlanB wrote:
“#bitcoin price track after 2020 halving is between 2012 and 2016 tracks. I added S2F ($100K) and S2FX ($288K) model targets. Targets are average prices, actual BTC price will oscillate around targets. If 2021 bull market follows 2017 then $100K it is, if we follow 2013 .. $288K.”
Currently, Bitcoin is consolidating after reaching a new all-time high above $48,500. If the price of BTC nears $60,000, it would cause the market capitalization of the cryptocurrency to surpass $1 trillion.
Moreover, at around $56,000, analysts say that there is a big options gamma squeeze awaiting for Bitcoin. Hence, the probability of BTC rising to around $53,000 to $56,000 remains high in the first half of 2021.
Lex Moskovski, a cryptocurency researcher and a quant trader, also emphasized that the market sentiment remains positive due to rising institutional interest. He said:
“Any institution, company, and individual that holds any of the ETF below or plain $TSLA, holds #Bitcoin as well. Tesla has pulled the ultimate trojan horse. Let’s welcome Warren Buffett and Swiss National Bank. Holding TSLA? You are long $BTC.”
Bitcoin Miners Posted $354M In Revenue Last Week, Breaking Record From 2017
Last week’s mining revenue eclipsed the previous record set in mid December 2017.
Bitcoin miners set a new record for weekly revenue after bringing in $354.4 million last week.
* Mining revenue growth was helped by the leading cryptocurrency’s performance last week following a string of positive developments, culminating in bitcoin hitting new record highs over the weekend just below $50,000.
* “Despite decreasing block reward, mining revenue on a USD basis has trended upwards,” said Ethan Vera, co-founder of Seattle-based mining company Luxor Technology, in a direct message with CoinDesk. “This is encouraging for the long term prospects of Bitcoin’s security and continued investments over the next few halving.”
* Weekly revenue eclipsed the previous record of $340 million set in mid-December 2017 near the peak of bitcoin’s prior bullish market cycle. CoinDesk revenue estimates based on network fees and block subsidy data from Coin Metrics assume miners sell their bitcoins immediately.
* Over 15% of the week’s revenue was from network fees, continuing a trend of strong growth in fee-based revenue from May 2020, per CoinDesk’s prior reporting.
* “Our miners are incredibly bullish on the future of mining,” Vera told CoinDesk. “January and February 2021 have been record months for most of them, and they are taking all of their profits and reinvesting it back into their business to grow future hashrate.”
Chinese Lottery Service 500.Com Acquires Bitcoin Mining Pool BTC.com
Chinese sports lottery service 500.com has entered a share exchange agreement to acquire major Bitcoin mining pool BTC.com.
Chinese sports lottery service 500.com has acquired a major Bitcoin (BTC) mining pool, BTC.com.
500.com has entered into a share exchange agreement with Blockchain Alliance Technologies Holding Company in the Cayman Islands, according to a Tuesday announcement.
As part of the deal, 500.com will acquire the entire mining pool business of Bitdeer Technologies Holding Company, including the domain name and a cryptocurrency wallet. Both the domain name and the wallet are operating under BTC.com but belong to Bitdeer, which is the parent company of Blockchain Alliance.
According to the announcement, the first transaction under the share exchange agreement is expected to occur on or before April 15.
500.com and Blockchain Alliance have also made certain agreements related to net operating profits. If BTC.com records a net operating profit in the fiscal year ending in December, 500.com will have to issue additional shares to the Blockchain Alliance.
Assuming that the minimum amount of the net operating profit is $20 million, a maximum of 22 million additional Class A ordinary shares can be issued.
In contrast, if the BTC.com mining pool business records a net operating loss during the same period, 500.com will be entitled to repurchase certain Class A ordinary shares held by the Blockchain Alliance.
500.com is a New York Stock Exchange-listed company (WBAI) offering a range of online lottery services. The company has been moving into the crypto industry recently. In early February, 500.com purchased 5,900 Bitcoin mining devices at $8.5 million. In January, 500.com announced that its private placement subscription price will be settled both in the U.S. dollar and Bitcoin.
Mining Machine Maker Canaan Rises 20% As Bitcoin Reaches A New All-Time High
Canaan shares have gained 230% so far in February.
Nasdaq-listed cryptocurrency mining machine maker Canaan Creative (CAN) has rocketed 27% Tuesday morning as bitcoin hit a new all-time high.
* Canaan is currently trading at $16.55, up from its Friday close of $13.04, according to TradingView.
* The company has gained nearly 250% month-to-date outpacing the rise in the cryptocurrency its machines mine.
Bitcoin has gained over 65% so far in 2021 after setting new record highs above $50,000 Tuesday.
* Higher prices for bitcoin (BTC, +0.19%) means increased demand for mining machines and a bigger premium for those machines.
* Shares of Canaan first closed above the company’s November 2019 listing price on Friday of around $12 before the U.S. holiday weekend.
* CEO Nangeng Zhang recently said the company “can now forecast our revenue much more precisely” after shifting its client base in late 2020 “to mostly publicly traded companies and bitcoin-focused investment funds which tend to place sizable orders with longer-term commitment.”
* Previously, the company mostly sold mining machines to individual operators “who may not have longer-term planning,” Zhang said.
* The Hangzhou, China-based company has a market value of $1.7 billion, per TradingView.
Mining Machine Manufacturer Ebang To Start Mining Bitcoins For Itself
The new venture is expected to increase revenue and “optimize” its product offering structure.
Nasdaq-listed mining machine manufacturer Ebang (EBON) announced its plans to start mining bitcoins using its own machines.
* Per a press release, the company’s board approved plans to operate a bitcoin mining business involving a combination of deploying its own machines, machines bought from other manufacturers, and leased computing power from other mining farms.
* Ebang expects mining to “increase our revenue in cryptocurrency business and optimize our product offering structure,” CEO Dong Hu said in the statement.
* The company also plans to build data centers for its mining farms.
* The proprietary mining venture is the latest expansion for Ebang. In late December 2020, the company announced its plans to launch a cryptocurrency exchange by April 2021.
* Shares of the Hangzhou, China-based company are trading at $10.38, up 44% this year. But other public mining manufacturers such as Canaan (CAN) have significantly outperformed Ebang with a 205% gain year to date.
GPU Hardware Firm Riles Gaming Community By Flirting With Crypto Miners
Hungry for coin? A computing hardware firm has angered gamers after apparently marketing the already scarce Nvidia RTX 30 series to cryptocurrency miners.
Computing hardware manufacturer Zotac angered a customer base of loyal gamers on Feb. 16 after it posted a tweet apparently marketing its new Nvidia 30 series graphics cards to cryptocurrency miners.
Zotac’s post showed a stack of what looks to be GeForce RTX 3070 White Edition GPUs, along with the caption, “An army of ZOTAC GAMING GPUs hungry for coin!”
An army of #ZOTACGAMING GPU’s hungry for coin!
— ZOTAC USA (@ZOTAC_USA) February 16, 2021
The availability of Nvidia’s 30 series graphics cards plunged moving into the new year, while their cost exploded. By late December 2020, Ether (ETH) miners could make $12,000 a month (depending on electricity costs) by combining 78 of Nvidia’s RTX 3080 GPUs. Since then, potential mining income has more than doubled, after the value of Ether increased 140% in the intervening period.
Not every Zotac follower on Twitter was pleased with the apparent attempt to court cryptocurrency miners. One user replied:
“Too bad those aren’t in the hands of all the gamers and PC enthusiasts as well…Especially the white limited edition that miners don’t care about.”
Another user, MWausE, tried to persuade Nvidia to stop supplying Zotac with GPUs if they weren’t going to be sold to gamers. They wrote:
“Dear @NVIDIAGeForce @nvidia, could you please Stop supplying Zotac with any New GPUs!! They are clearly not interested in selling them to loyal gamers.”
The shortage of high-end graphics cards amid a renewed cryptocurrency bull run saw the cost of Nvidia’s 30 series cards almost double since release — from $699 in September, to around $1,300 at the time of publication.
Even portable computers that contain the 30 series GPU have been snapped up by Ethereum miners in China, who have constructed mining farms made from stacks of interconnected laptops.
In January, Nvidia’s chief financial officer, Colette Kress, assured gamers that they were still the main focus of the firm’s attention, and claimed the current shortage was a result of increased demand from gamers alone.
Russian Crypto Mining Firm Scrambles To Meet Foreign Demand
Russian crypto mining giant BitRiver is rushing to build two new data centers to meet increasing demand from global crypto miners.
Global cryptocurrency mining operators are increasingly moving their equipment to Russia and the Commonwealth of Independent States as they chase lower energy prices.
Igor Runets, founder and CEO of Russian crypto mining firm BitRiver, told local news agency Kommersant Thursday that the company is actively building up its power capacity to meet increasing demand from American and European investors.
According to the executive, BitRiver has run out of spare capacity at its data centers, having fully reserved all of its power for the next 18 months. During this period, the company expects to co-locate mining equipment of total mining power estimated at 1 GWh.
BitRiver, which operates the largest colocation services for Bitcoin (BTC) mining in Russia and the CIS region, is now building two new data centers in Russia, including an 80 MWh facility in Krasnoyarsk and a 300 MWh center in the Republic of Buryatia. The company expects to deploy 100 MWh by fall 2021, meeting only half of expected demand.
The CEO noted that the growing demand is mainly coming from the United States and Europe, with investors partly moving their operations from China, Africa and Latin America, seeking lower energy prices.
But the main reason for the increasing demand is the ongoing crypto rally with prices hitting new records, Runets stated. BitRiver has been already aggressively tapping the demand, setting up a massive batch of Bitcoin miners in December 2020.
Nikita Vassev, founder of CIS mining market-focused forum TerraCrypto, said that many miners are actively moving their operations from China and the U.S. to CIS countries. The exec suggested that the growing demand is coming from investment strategies intending to distribute power among different continents. Vassev said that mining operations in the U.S. and Canada are more expensive due to logistics and energy costs.
Amid a parabolic spike in mining-generated rewards, crypto mining has become more popular than ever, which has caused a significant surge in crypto’s energy consumption. As previously reported, Bitcoin energy consumption has been at its highest historical levels since late 2020, with the estimated annual consumption level staying above 75 TWh for a record period of time.
Mining Bitcoin With Flared (Wasted) Gas
As part of our Bitcoin is an energy solution, not an energy problem mini-series, I will be dedicating this one to mining bitcoin with flared gas. Since the demand for oil is not going away anytime soon, there is a massive opportunity to harness one of the largest energy byproducts in the world and convert it into bitcoin.
Here’s how I see one of the world’s next massive digital gold rushes taking place.
What Is Flared Gas?
Flared gas is a byproduct of extracting oil from the ground. Oil wells produce oil as the primary product but they also produce a byproduct; natural gas which is mostly methane. If this gas is just released into the atmosphere, it is much worse for the environment than if it were to be burned off. This burned gas is called flared gas.
You have probably seen flared gas if you have ever driven by an oil well or refinery and a torch seems to be burning for what seems like no reason. It’s actually being burnt for a reason.
Why Do They Flare Gas Anyway?
There are a number of reasons why they flare gas. They can extend from releasing excess pressure from an oil well to testing the flow and mixture of natural gas in a well. The most common reason why gas is flared is to reduce the environmental impact of a well and avoid being fined by governments. I tend to think that the latter is the main reason.
You might be asking “Why not collect the gas and sell it to consumers to heat homes or run gas stoves or something?”
That’s a great question but the answer may not be so obvious to those who don’t understand the economics of the energy industry. Depending on the local infrastructure, it actually has both a greater financial and environmental cost to trap the gas than to just burn it off.
How Can We Harness The Power Of Flared Gas?
Since natural gas is valuable, oil companies would rather capture the gas and sell it to reduce operating costs or even increase profits but capturing gas doesn’t come without its own set of challenges. Often times oil wells are in remote parts of the world where there is no infrastructure to collect the gas. The hard part is how to capture the gas in an efficient and environmentally feasible manner.
Imaging spending $10 worth of resources to produce a $5 product. It simply does not make sense. It’s actually worse than that because it also would create 10 units of pollution to reduce pollution by 5 units. These numbers are figurative (not actual) to help you to understand why it doesn’t make sense to capture all flared gas.
Since flared gas is already considered waste, it makes sense that we would look for ways to turn that waste into something useful for society. Instead of further investing in fossil fuel infrastructure to harness and use that gas, it makes more sense to find ways to convert that into something of value at the well’s flare site.
I believe that bitcoin mining is the solution.
Mining Bitcoin With Flared Gas
This is where the interesting part begins. To turn that surplus energy into bitcoin, you need to convert the gas into electricity via a natural gas generator. Once you have electricity at your oil well, what do you do with it?
The next step is to run bitcoin miners with what is essentially free electricity (minus the cost of the natural gas generator and your bitcoin miners.) Since some oil wells produce a LOT of oil you are potentially talking about tens of millions of dollars of free energy that is otherwise going to be wasted. Talk about “money to burn”.
According to a report from the Environmental Defense Fund (EDF), in 2017, nearly $322 million dollars of natural gas was flared in the Permian basin of Texas alone. That seems like a REALLY big number to an individual like you and me but in the multi-billion dollar oil industry, that’s pocket change.
Imagine being able to mine bitcoin with $322 million worth of free electricity. Again, that was just in ONE region, in ONE state, in ONE country, in ONE year. Think of the global amount of energy that is being wasted each year as gas flare. It’s likely well into the BILLIONS.
There is also a political benefit of mining bitcoin with flared gas. I’m talking about flaring fines imposed by local and state governments. Oil wells can’t just flare as much and as long as they want. There are often heavy fines for flaring as well as fines for not complying. If oil companies could utilize some of this waste, they could save big on flaring fines.
Combined with reducing overhead from the mined bitcoins, that’s a nice double-edged sword to stay profitable in an incredibly competitive industry.
How Do I Mine Bitcoin With Flared Gas?
How do I mine bitcoin with flared gas? This is going to be a multimillion dollar question in the next decade.
As soon as oil companies realize that they can convert this excess gas into money with little to no infrastructure as well as avoid flaring fees from local and state governments, there will be a new mining arms race to see who establish the most efficient flared gas bitcoin mines.
Currently, there are only a handful of companies who have the foresight to jump on this new gold mine of opportunity but that will change. As soon as someone starts to make absurd gainz with little risk, the competition will heat up. Here are the companies that I was able to find after a pretty substantial amount of Googling.
Upstream Data, based in Canada, sees this waste of flared gas as an opportunity to turn wasted energy into bitcoin. They already offer a mining skid that is basically a 20-foot shipping container with a natural gas generator and a remote internet connection pre-installed.
If you have an oil well in a colder climate that is producing lots of natural gas, then you just need to add some bitcoin miners and start turning that natural gas into bitcoin.
When a well runs dry, you can just move the shipping container to your next well and start all over again. No need to run expensive pipelines or invest any further in fossil fuel infrastructure.
I personally believe that finding ways to harness waste is going to be one of the next waves of innovation in bitcoin. Instead of looking for ways to purchase electricity from the energy grid, we will instead be looking for opportunities to convert wasted energy into useable energy via bitcoin mining.
It does nothing but make mathematical sense for both energy producers and energy consumers alike to turn waste into something useful, reduce overhead and keep the bitcoin network secure.
Bitcoin Mining Operator Northern Data Reportedly Considering $500M IPO
Swiss investment bank Credit Suisse is reportedly backing German Bitcoin mining operator Northern Data in its $500 million IPO.
Major European Bitcoin (BTC) mining company Northern Data is reportedly considering going public in the United States.
Germany-based Northern Data is planning to raise up to $500 million in an initial public offering, or IPO, Bloomberg reported on Monday. The company is working with Swiss investment bank Credit Suisse to proceed with the IPO, anonymous people familiar with the matter told the publication.
According to the report, the company is considering conducting a sale of new shares later in 2021, intending to boost Northern Data’s shareholder base along with its global profile. Northern Data’s shareholders include investors like Galaxy Digital founder Mike Novogratz as well as companies like investment firm Cryptology Asset Group and EOS developer Block.one.
Northern Data has been listed on Germany’s over-the-counter market since 2015, and its stock has surged more than 300% over the past year. At publishing time, Northern Data stock is trading at 112 euros ($136), down more than 11% over the past 24 hours amid a major sell-off on the crypto market, according to data from Bloomberg.
Based in the outer parts of Germany’s financial hub of Frankfurt, Northern Data operates mining data centers in areas with cheap electricity. Its largest facility, located in Rockdale, Texas, is one of the world’s largest crypto mining facilities with a planned capacity of 1 gigawatt hour by the end of 2021. The company reportedly started as a Bitcoin mining firm but later moved to operating data centers on behalf of customers.
Credit Suisse declined to comment to Cointelegraph on its involvement in Northern Data’s IPO. As previously reported, Credit Suisse was once among IPO backers for Bitcoin mining giant Canaan Creative. However, the bank renounced its involvement amid concerns over the order sufficiency in November 2019.
Northern Data declined to comment on the matter to Cointelegraph, as well.
Bit Digital Expands Its North American Hosted Mining Partnerships
The company plans to expand U.S. mining with Compute North, Core Scientific and others, per a release.
Nasdaq-listed bitcoin mining company Bit Digital (BTBT) announced plans to expand its North American-hosted mining presence through its partnership with Compute North, Core Scientific and Link Global Technologies.
* To date, the company hosts 2,100 machines with Compute North. The updated partnership will see Bit Digital move an additional 3,000 S17+ machines during Q2, per a press release.
* Interim CEO Erke Huang said partnerships with Compute North and others will allow his company to “quickly expand U.S. based bitcoin production.”
* While it plans to expand in the U.S., Bit Digital is currently facing class-action lawsuits based on allegations of fraud misrepresenting its Asia-based mining capacity. Those allegations first surfaced in a report by J Capital in late January.
* The company has also undergone some senior-level leadership changes after removing its former CEO Min Hu and accepting the resignation of board Chairwoman Ping Liu, per CoinDesk’s prior reporting.
* Shares of the mining company have dropped over 45% to around $16.16 at last check, per TradingView data.
Companies That Have Nothing To Do With Crypto Are Pivoting To Mining
While these moves seem opportunistic at first glance, some of the companies are well-positioned to get involved in bitcoin mining.
Baked goods and tea. Emergency rescue. Online lotteries. These are some of the products and services offered by U.S.-listed Chinese companies that have pivoted to bitcoin mining in recent months, trying to capitalize on the current bull run.
This is not just short-term opportunism. Access to Chinese miners, state-owned energy providers and the U.S. capital markets make these companies well-positioned to swiftly expand mining operations. They can also earn high premiums in the stock market, according to industry pros.
These companies’ connections to Chinese bitcoin miner makers, local hosting mining sites and state-run electricity companies give them an edge over their competitors in the west, said Ethan Vera, CEO of Seattle-based crypto mining company Luxor.
“Some of the companies are partially owned by the Chinese government. They could get permits to operate in hydro power-rich areas or great deals with state-run electricity companies,” Vera said.
For example, Shenzhen-based lottery firm 500.com, which used to profit from helping China’s state-run lottery centers sell tickets, has signed contracts with the State Grid Corporation of China, a state-owned energy company, to enjoy discounted electricity for its data centers. The company’s subsidiary, Loto Interactive, also has permits to run data centers in the “excessive hydro power” areas designated by the local government in Sichuan and the Tibetan autonomous region.
Adding bitcoin mining to these companies’ businesses can significantly boost their valuation multiples, said Yulong Liu, managing director at Babel Finance, which is one of the largest Chinese crypto lenders.
“These stocks are trading at a very high premium,” Liu said.
Shares of Nasdaq-listed Chinese online gaming company The9, which had the exclusive license to distribute World of Warcraft in China, rose by over 750% year to date after it announced plans to make investments in crypto in January. Sino-Global Shipping, an international shipping company that said it would invest in bitcoin mining, gained over 300% on its stock price on Feb. 3. SOS, a Chinese emergency services provider, had an over 300% year-to-date gain on its stock price.
The stock price of Urban Tea, a Chinese bakery and specialty retailer, increased by over 200% year to date after its pivot to bitcoin mining.
Given some of the companies’ current investments in bitcoin mining versus their valuation, these stocks might have been traded at a very expensive price, Liu said.
Being listed on the U.S. stock exchanges also helps these companies expand their mining operations quickly, said Lingxiao Yang, COO of crypto hedge fund Trade Terminal.
However, the largest mining companies, such as f2pool and Poolin, have not gone public yet, which means they can not just issue shares to raise money for expansion.
If miners in China want to expand their operations or maintain cash flow, they would need to sell mined bitcoin through the over-the-counter (OTC) desks or collateralize their bitcoin to take out a fiat loan. Further, there are growing risks for them to do so because China continues to crack down on OTC trading and make financial transactions related to bitcoin in Chinese banks even more difficult.
The sustained bitcoin bull run appears to have emboldened these companies to make hefty investments in bitcoin mining.
Loto Interactive, which is majority-owned by 500.com, set up data centers in China’s bitcoin mining hub, Sichuan province, in early 2019. The firm now has at least three data centers in Sichuan, which contributed 96.7% of its total revenue in 2019.
The data centers combined could generate up to 6.27% of the hash rate on the bitcoin network, which would make it the sixth-largest mining pool in the world.
“500.com has been quietly developing its bitcoin mining businesses for a few years,” Liu said. Now, “the lottery firm seems to be doubling down on bitcoin mining as bitcoin is seeing the biggest bull run in history.”
500.com’s stock price soared in December 2020 after its chief executive announced the firm would focus on bitcoin mining, and saw a few more spikes when the company announced that it would to buy $8.5 million mining machines, purchase more shares of Loto Interactive and acquire the mining pool services of Bitmain spinoff Bitdeer.
One reason the companies are going all in on cryptocurrency is the sustained bull run.
“We are currently around $50,000 per bitcoin, which makes it extremely profitable for the miners,” he said. “Even if the price drops to $30,000, the miners are still going to make money.”
It’s not only bitcoin pushing these stocks up. Historic gains on ether (ETH, -5.91%), the native asset to the Ethereum network, which is the second-largest cryptocurrency, is another driving force. The9 plans to invest in ether mining, which has been highly profitable thanks to increasing gas fees and its staking services.
A continued rise in bitcoin may push mining companies’ stocks higher but a decline could hit many of these firms when they may not be financially sound otherwise. These companies are searching for a strong revenue stream while they are struggling with their non-crypto businesses.
For example, 500.com has posted continuous losses since it suspended all of its online lottery ticket sales due to China’s nationwide inspection on the industry in 2015.
The risks know no boundaries. In the U.S. Riot was a biotech company that made diagnostic machines before rebranding as Riot Blockchain in October 2017. Its penny stock doubled in price after the shift.
But what rises can fall. Shares of Riot Blockchain as well as Marathon and Hive fell dramatically when bitcoin’s price dropped this week, with the companies losing over $1 billion combined. In the meanwhile, 500.com suffered a 16% decrease.
Riot is a success story, at least for now, but another firm pivoting to blockchain at about the same time as Riot, Long Blockchain Corp, is a cautionary tale for many non-crypto-turn-bitcoin public companies.
Long Island Tea Corp, a lemonade and iced tea company, announced plans to invest in blockchain and crypto amid bitcoin’s 2017 bull run. It changed its name to Long Blockchain Corp.
The move came at a time when the tea company was desperately trying to stay listed on Nasdaq. However, it aborted its plan when the bitcoin price crashed in 2018. The company later faced an investigation by the U.S. Securities and Exchange Commission (SEC) and wound up losing its Nasdaq listing anyway.
The boom in Chinese blockchain-related stocks in late 2019 is another lesson for companies that make opportunistic investments in this emerging technology.
Shortly after Chinese President Xi Jinping called the nation to seize the opportunity on blockchain, a slew of companies that were unrelated to blockchain claimed they had launched ambitious blockchain projects. Their stocks soared.
Some of the companies, including one obscure porcelain manufacturer, were accused by Chinese financial regulators of misleading investors by saying they are involved in blockchain whereas no financial disclosures had shown they were. The stocks have steadily dropped to their previous levels since the gold rush in blockchain cooled off in the country.
China Region Declares War On Crypto Mining, Stirring Wider Fear
China’s Inner Mongolia has banned cryptocurrency mining and declared it will shut all such projects by April, spurring fears the world’s No. 2 economy will take more steps to eradicate the power-hungry practice.
The autonomous region, a favorite among the industry because of its cheap power, also banned new digital coin projects, according to a draft plan posted on the Inner Mongolia Development and Reform Commission’s website Feb. 25. The aim is to constrain growth in energy consumption to about 1.9% in 2021.
Bitcoin extended gains on Monday amid reports of the move, increasing as much as 6% in the session to $47,970.
The announcement unnerved an industry that’s already been through a years-long Chinese campaign to clamp down amid concerns over speculative bubbles, fraud and energy waste. The draft policy was released weeks after China’s top economic planner blasted Inner Mongolia for being the only province to fail to control energy consumption in 2019.
The region now aims to cut emissions per unit of gross domestic product by 3% this year and limit incremental growth of energy consumption to about 5 million tons of standard coal, according to the draft plan.
Chinese officials first outlined proposals in 2018 to discourage crypto-mining — the computing process that makes transactions with virtual currencies possible but consumes vast amounts of power.
Inner Mongolia, which is clustered with large coal mines, is famous for inexpensive energy and has attracted investment from a plethora of power-intensive sectors such as aluminum and ferro-alloy smelting over past decades.
The region accounted for 8% of global Bitcoin mining computing power, according to the Bitcoin Electricity Consumption Index compiled by Cambridge University. China overall had over 65% of the network’s total, with its appealing combination of inexpensive electricity, local chipmaking factories and cheap labor.
The local crackdown is reviving old fears. Beijing since 2017 has abolished initial coin offerings and clamped down on virtual currency trading within its borders, forcing many exchanges overseas. The country was once home to about 90% of trades but the lion’s share of mining and major players like Bitmain Technologies Ltd. have since fled abroad.
Taiwan Semiconductor Manufacturing Co. and Nvidia Corp. are among listed chipmakers that supply crypto miners in China and around the world.
Mining Bitcoin For Heat, Strawberries And Chickens
More and more people are turning to crypto mining to heat their homes and businesses – and earn a profit.
There are strawberries growing in the village of Neuville, Quebec, in the middle of a Canadian winter. The small farm Le Caveau à Légumes is funneling the excess heat from crypto miners to battle the frost, and grow a rarity for the region.
“Now is really cold, so we need the heat,” Melissa Girard, an agronomist at the small producer, told CoinDesk in a phone interview. “We couldn’t afford to produce strawberries if we had to pay for electricity.”
The farm is among a growing number of businesses and individuals turning to crypto mining for supplementary income, but approaching the highly consumptive industry in a carbon-neutral way.
Bitcoin is wasteful by design. The distributed network eliminates centralized and trusted parties by trading energy for consensus. Miners – essentially specialized graphics chips designed to churn through cryptographic math problems – audit the network and receive the occasional subsidy for that work.
Some see this as an inborn inefficiency, others as a necessary price to pay for an open and uncensorable payment network. No matter your view, however, it’s a fact that bitcoin (BTC, -1.67%) mining expends a ton of power.
Cambridge University estimates the global bitcoin network consumes more energy than Ukraine did in 2019. This figure has certainly increased along with the cryptocurrency’s meteoric price rise, which draws in less-efficient miners that could now operate in profit. This is to say nothing of another bitcoin externality: heat.
Enterprising folks see that byproduct as crypto mining’s saving grace. For most of Bitcoin’s existence, it has not been economical for individuals to participate in the network by mining. But with a little know-how and some PVC pipe and duct tape, bitcoin mining can generate profit while helping to cut power bills.
Le Caveau began mining cryptocurrencies to generate heat for its greenhouses, and help offset the cost of electricity, in 2018. It was part of a pilot for the upstart hobbyist mining manufacturer Heatmine, also based in the region, which never got off the ground.
Founded by Jonathan Forte, Heatmine pitched itself as an ethical solution to crypto’s worrisome environmental footprint. The manufacturer wanted to offer a way for home and business owners to spin up a miner, earn passive income and recycle some of the heat generated in the process.
While the startup has folded (the website is offline, and Forte now says his partners “never delivered”) the idea has taken hold even without dedicated heat-producing miners.
Kevin Carthy, founder of bitcoin ATM operator WinnipegBTC, has been reducing his carbon footprint while participating in the Bitcoin mining ecosystem by recycling heat into his office since 2013, he said in a direct message. He also uses it to keep his “little electric car warm in the winter,” he said.
Canada’s cheap energy and cold weather make it the ideal location to “mine for heat,” he said. While our conversation ran short, Carthy estimated his cost in 2018 to operate a bitcoin miner at $70 with revenue of $100 in crypto per month.
“We have cold weather, and we have inexpensive hydro,” Carthy told local news station CTV News. “You mine for heat and you still make a profit.”
Those figures line up with returns seen by other people experimenting with small-scale crypto mining. Christian Haschek, a computer scientist and tech blogger, recently started solo-mining ether (ETH, -3.59%) (ETH) in his home in Austria.
“It has always been my lifelong wish to warm my home with the server heat,” Haschek said. After designing his own environmentally efficient house, which is primarily powered by solar energy, he started experimenting.
Haschek uses four crypto miners (that run at about 176°F) to preheat the air in his central ventilation system. “It’s basically just a funnel,” he said. “It’s a pretty low-tech solution.” Even still, he said the incoming ETH covered half his electricity bill in January while also lowering the heat pump’s electricity needs by about 50%.
“Mining is not very efficient,” he said. “I’m reusing the heat I’m self-producing, so it’s almost a closed loop.”
Haschek estimates his mining operation would be profitable as long as ETH stays above about $900 (at the time of writing, it is above $1,500). Despite the allure of nearly free money, it’s only a solution for colder months, he says.
“It would definitely in the summer end up cooking my tomatoes on the vine,” Thomas Smith, a tech photographer and CEO of Gado Images, told CoinDesk. At the beginning of the pandemic, Smith began pumping heat from his crypto miners into a greenhouse in California.
Smith’s crypto mining adventures go back several years, when he decided to see if a rig could warm his home. The trial was a success, though he realized the variable nature of mining might be better suited to hobbyist pursuits.
Now in a new house, Smith is using the radiant heat to keep his chickens happy at night. “It’s a little bit easier because chicken coops have to be pretty well ventilated, so you’re putting the heat into the coop, but it’s circulating and being vented out.” (Chickens produce more eggs when coop temperatures reach 70 degrees F or so.)
He’s now thinking through how he might be able to automate when his rigs to turn on and off, adjusting to the temperature of his home, garden or coop. Not counting the value of his farm birds or caprese salad, Smith estimates he’s earned about $1,600 worth of cryptocurrencies.
It’s mostly just a hobby that helps pay for itself. But Smith, like Haschek, thinks it could provide a path forward for others looking to help secure cryptocurrency networks without adding to their climate guilt.
Of course, these efforts are small, and nowhere near significant to counterbalance the larger geopolitical forces at play in corporate crypto mining. But it’s a start.
And it couldn’t come at a better time. With bitcoin’s price going parabolic, alarm over the network’s consumption has never been sharper. Projects like Layer1 in Texas, which is making use of excess renewable energy production in West Texas as well as the numerous hydro-powered mining farms across the U.S., Canada and China are doing little to improve bitcoin’s image.
“Even if I scale this up as much as I could as one individual, it’s not going to take me super far. But if a lot of people take these ideas and apply them at a larger scale, that could start to have a major impact on how much electricity and carbon emissions come out of these technologies,” Smith said.
Even neophytes such as Melissa Girard, from Le Caveau, who only lets the machines run while she tends to the plants, could see a future in crypto.
“It could be a nice way to heat houses,” she said.
Bitfarms Set To Acquire 48,000 New Miners In 2022 Despite Chip Shortage
Chinese supplier MicroBT will be providing the new hardware over the next two years.
One of the largest publicly traded Bitcoin mining operations in the world, Bitfarms, has undertaken to purchase 48,000 new miners over the next two years.
The Canadian mining company has sourced the equipment from Chinese supplier MicroBT in a bid to increase its hashing capacity by another 5 EH (exahashes) according to reports. Bitfarms was founded in 2017 and currently has a capacity of 1 EH. It has targeted a 200% increase by the end of 2021.
The hashing capacity is the amount of pure computing horsepower that can be dedicated to mining Bitcoin or cryptocurrencies.
The firm anticipates the initial shipment of hardware to take place on or before January 2022, with the final mining rigs expected to arrive in December 2022. It will increase its overall hashing capacity to a total of 8 EH over the next two years. Emiliano Grodzki, CEO of Bitfarms, stated it was getting harder to secure mining rigs:
“The supply of miners will be one of the greatest challenges in for the foreseeable future due to a global shortage of wafers used to create semi-conductor chips which is a vital component in mining rigs.”
The report did not specify which units would be purchased but MicroBT’s flagship product is the “WhatsMiner M30S++” boasting 112 TH/s and retailing at $9,300. The company website currently reports all mining devices are sold out.
Over the past eight months, Bitfarms has acquired over 12,000 mining rigs from MicroBT, citing reliability and power efficiency as reasons for the purchases.
In December 2020, Bitfarms deployed 1,000 new Whatsminer M31S mining rigs and placed an order for an additional 3,000 Whatsminer M31S+ miners scheduled for delivery in late February 2021.
Bitfarms was the first Bitcoin mining company to complete its long-form prospectus with the Ontario Securities Commission and started trading on the Toronto Stock Exchange in July 2019. The company has five industrial scale facilities located in Quebec, all powered with hydroelectric energy.
Kentucky Bill To Provide Tax Breaks For Local Crypto Miners
Kentucky needs to attract more crypto mining businesses by offering tax breaks, local lawmakers believe.
Lawmakers in Kentucky are looking to impose tax breaks for local cryptocurrency miners.
Kentucky lawmakers on Tuesday approved several state tax breaks including House Bill 230, which would remove the sales tax from electricity purchased by local crypto mining operators.
According to a report by the Lexington Herald-Leader, Kentucky legislators voted 19 to two for the new measure.
The bill’s fiscal note is reportedly estimated to cost the local budget at least $1 million annually. The exact cost cannot be calculated so far because “it is unknown how many of the businesses might choose to locate here to avail themselves of this exemption,” lawmakers said.
The bill’s sponsor reportedly urged that Kentucky needs to attract more cryptocurrency mining businesses by offering tax breaks on consumed electricity. Representative Steven Rudy emphasized that cryptocurrency mining needs to be supported as an industry in the state.
“Mining for cryptocurrency takes a lot of electricity. It is very heavily impactful on industrial-type things. It is not just a few people sitting in their mom’s basement or in their parents’ basement writing code. This is actually highly sophisticated, highly technical,” he said.
Kentucky has been attempting to attract crypto business to the state. In January 2021, Kentucky economic development officials approved tax incentives for Blockware Mining to open a crypto mining operation in Paducah, with a total investment of $28 million. The Kentucky Senate has been also advancing its own tax break bill for cryptocurrency mining, Senate Bill 255.
Bitcoin Miners Saw Record $1.36B Revenue In February
Miner monthly revenue increased 21% from January.
Bitcoin miners broke a record of more than three years in February, generating $1.36 billion in revenue, up 21% from January, according to on-chain data from Coin Metrics analyzed by CoinDesk.
The previous revenue record of $1.25 billion was set in December 2017 during the peak of the cryptocurrency’s previous bull market. Last month’s surge in revenue came as bitcoin (BTC, +0.04%)‘s price climbed during the month from $33,000 to a new all-time high of just above $58,000 before dropping sharply to $43,000 in the last week.
Revenue estimates assume miners sell their BTC immediately.
Measured by per terahash per second (TH/s), miner revenues bounced between $0.23 and $0.38 through February, ending the month near $0.30, per data from Luxor Technologies.
Network fees brought in $186 million in February, or 13.7% of total revenue, a significant percentage increase from the 10.3% of revenue represented by fees last month. Fee revenue hit its highest mark since January 2018, per Coin Metrics data.
Notably, fees as a percentage of total revenue continues a strong upward trend since April, prior to the network’s third-ever block subsidy halving in May. Increases in fee revenue are important to sustain the network’s security as the subsidy decreases every four years.
How The Oil Market Bounced Back From A Year Of Crisis
A fall in stockpiles, restraint among U.S. producers and the speedy recovery in Asian demand have driven the rally.
Oil prices have staged a rapid recovery since the biggest crisis to strike the energy industry in decades.
The Organization of the Petroleum Exporting Countries and its allies stepped in last spring to backstop the market by slashing production in the teeth of a collapse in crude prices. This week, the cartel is expected to reach a deal on unwinding some of those cuts.
Here is why U.S. crude prices have roared back above $60 a barrel from a low of minus $37.63 a barrel last April.
Traders and analysts say supply and demand, rather than speculation, have underpinned the rally so far. The ratio of positions held by money managers in WTI futures and options contracts who expect oil prices to rise, versus those who expect them to fall, is below levels seen during the last big run-up in oil prices in 2018. That suggests investors aren’t in the driving seat.
Analysts say that may change if money managers pile into the oil market to bet on the reopening of economic activity.
Oil stockpiles that ballooned at the start of the pandemic have shrunk thanks to output cuts by OPEC, its partners and companies in the U.S. and elsewhere. Concerned that another round of lockdowns would derail efforts to rebalance the market, Saudi Arabia made an additional cut in January.
Analysts say the winter storm in Texas, which briefly knocked out almost half of U.S. crude production, will also help to drain global supplies.
Global demand now exceeds production by 2.8 million barrels a day, according to Morgan Stanley strategist Martijn Rats. The first three months of the year are on course to be the most undersupplied quarter for the oil market since at least 2000, he estimates.
“This market is in a severe deficit right now, which is why the inventories are dropping like a brick,” said Jeffrey Currie, head of commodities research at Goldman Sachs Group. The bank forecasts that Brent crude prices will hit $75 a barrel in the third quarter. They are currently at just under $64 a barrel.
Measuring output and demand in real time is tricky, but the relationship between prices for barrels of oil delivered at different dates suggests buyers are vying for crude. Traders are willing to pay a chunky premium to take hold of crude right away instead of in a year’s time, a far cry from last spring when spot prices fell to a massive discount.
“That’s telling you the market is hungry for oil, that we need oil out of inventories,” said Saad Rahim, chief economist at commodities trader Trafigura Group. “This is not a market that has fully healed, but it is definitely a market that is healing.”
Demand On The Mend
Demand has recovered in China and India and is on the mend in the U.S. and Europe. Americans consumed 18.6 million barrels a day of gasoline and other fuels in January, the Energy Information Administration estimates. That is 26% more than last April, though still down about 7% from January 2020.
Forecasts for further price gains are predicated on the idea that vaccinations and fiscal stimulus will unleash economic activity in the U.S. and Europe. “Beyond Easter is where people will really start to travel and get back on the road,” said Mr. Rahim.
Paola Rodríguez-Masiu, vice president for oil markets at consulting firm Rystad Energy, is more cautious. Based on data such as road and air traffic, she doesn’t expect crude demand to recover to pre-pandemic levels until late 2022.
The Shale Question
Producers are holding back millions of barrels a day of crude, raising a question: Will prices come under pressure if they open the spigots? Analysts expect the OPEC-plus group to boost output gradually through the year, starting with a decision to unwind some of its cuts on March 4.
But traders and analysts say the U.S. won’t churn out 13 million barrels a day, as it did on the eve of the coronavirus crisis, soon. Under pressure from shareholders and creditors to give priority to cash flow, companies haven’t rushed to pump more oil in response to higher prices.
The industry’s newfound discipline has pinned the number of horizontal drilling rigs below levels needed to maintain production at 11 million barrels a day, let alone return output to pre-pandemic levels. That resolve will be tested if prices keep rising, said Ronald Smith, senior oil-and-gas analyst at BCS Global Markets.
After a brutal 2020 for energy companies, expectations of a return to economic normality have propelled the sector to the top of the S&P 500 leaderboard this year. Yet shares of companies like Exxon Mobil Corp. and Royal Dutch Shell PLC have lagged behind the oil market itself, and stock prices haven’t returned to pre-pandemic levels.
One reason is that investors are mindful that the market’s current strength might not last, analysts say. Another is that money managers expect some oil companies to give priority to reducing their debt loads over shareholder returns. Even before the pandemic, electric vehicles and the proliferation of renewable sources of energy were raising questions about the future of the fossil-fuel industry.
Executives are circumspect. “I feel as good as you can, given some of the uncertainty out there with the residual pandemic effects,” Exxon Chief Executive Darren Woods told analysts in early February.
Argo Blockchain Buys 320 Acre Land Plot In Texas To Expand Mining Operations
The acquisition will provide Argo with access to up to additional 200MW of cheap and renewable electrical power.
Publicly-listed mining company Argo Blockchain has finalized its acquisition of a new, 320 acre land plot in West Texas, United States, which it plans to use for the construction of a new 200NW cryptocurrency mining facility.
News of the planned acquisition first broke in mid-February, after Argo entered into a Letter of Intent with DPN LLC of New York. Details of the deal indicate that the acquisition was completed at an initial price of $5 million, satisfied by the issue of roughly 3.5 million new shares in Argo to DPN shareholders. A further payment of shares worth up to $12.5 million will occur once milestones related to the project are fulfilled.
The cryptocurrency miner, which is based in London and trades on the London Stock Exchange under the ticker ARB, has until now tapped cheap hydroelectric power in Quebec, Canada, for its cryptocurrency mining operations. In mid-January of this year, the company had raised fresh funds through a private placement with institutional investors in order to purchase new hardware and contribute towards financing its expansion.
Chief Executive Peter Wall has said that the new site in Texas will provide the firm with “access to some of what we believe is the cheapest renewable energy worldwide, in a location where innovation in new technologies is encouraged and incentivised.” In correspondence with Cointelegraph, Wall added that:
“[The acquisition] provides Argo with an excellent opportunity to make a very significant expansion to our current mining capacity. It also highlights the opportunities for miners within the US to build out their mining capabilities at some of the most competitive electricity rates globally.”
Cheap and deregulated energy production in Texas is indeed one of the key factors contributing to the state’s rising reputation a popular jurisdiction for blockchain firms in the U.S., with well-known names like Bitmain already operating there.
A trade association called The Texas Blockchain Council was, moreover, formed back in November 2020, with the aim of coordinating a “Blockchain Caucus” of lawmakers in the state legislature to promote blockchain-friendly initiatives and legislation at a state level.
Argo, which focuses on mining Bitcoin (BTC) and Zcash (ZEC), plans to construct its 200MW mining facility within the next 12 months. Following the acquisition, it will have access to up to a total of 800MW of electrical power.
In response to Cointelegraph’s question regarding the possible implications of the recent, high-profile power blackouts in Texas this winter, Wall said that Argos “understand[s] fully the Texas power grid challenges and opportunities,” but that the company still “think[s] it’s a great place to build a facility.”
Reflecting the bullish mood of the cryptocurrency markets in 2021, Argo has also recently revealed that Wall has ostensibly become the first executive of a publicly traded company to take his entire salary in Bitcoin.
More FUD About Bitcoin Ruining The World’s Climate
Asset managers are warning industry giants like Tesla and PayPal that investing in energy-intensive assets like Bitcoin could diminish their popularity among investors.
Allocating capital to Bitcoin risks a backlash from environmentally conscious investors, according to author and co-anchor of CNBC’s Squawk Box, Andrew Ross Sorkin.
In a piece for the International New York Times, syndicated worldwide, Sorkin pointed to statements by Lawrence Fink, CEO of Black Rock — the largest asset managers in the world — indicating his company would make all future investment decisions based on “how they plan to meet the climate challenge.”
Tesla’s $TSLA recent bet on bitcoin sullies its green credentials. Mining and transacting the cryptocurrency requires huge amounts of computing power and electricity, much of it from fossil fuels #btc #ev pic.twitter.com/lv0pvossdr
— Michael A. Gayed, CFA (@leadlagreport) February 21, 2021
Sorkin mentioned PayPal, Square and Tesla as examples of BTC-buying companies with strong green initiatives. But such initiatives seem in principle at odds with Bitcoin’s energy inefficient method of making transactions which adds to the carbon in the atmosphere:
“All of which raises a crucial question: Does the movement among investors toward companies that rank highly for environmental, social and governance issues pose an existential threat to Bitcoin’s success?”
Sorkin authored a book on the Wall Street banking crisis, Too Big to Fail, in 2009, which was on the New York Times bestseller list for six months and made into a movie in 2011.
Tesla received $1.5 billion in environmental subsidies in 2020, funded by U.S. taxpayers. The subsidies are intended to reward and encourage environmentally friendly behavior. #Tesla then spent the same amount buying #Bitcoin, which wastes electricity and harms the environment.
— Peter Schiff (@PeterSchiff) February 11, 2021
Tesla came under fire in Feb. after Ben Dear, the CEO of sustainable products investor Osmosis Investment Management told Reuters that the company should “concentrate on measuring and disclosing to their market their full suite of environmental factors,” in light of its Bitcoin purchase. The statement emphasized the need for greater transparency by Tesla when it comes to environmental accountability:
“(We hope that) if they continue to buy or indeed start mining Bitcoin, that they include the relevant energy consumption data in these disclosures.”
According to the 3rd Global Cryptoasset Benchmarking Study published by the University of Cambridge, up to 39% of all proof of work mining globally is conducted using renewable sources of energy, mostly hydroelectric power. Other estimates put the figure higher.
Approximately two-thirds of all Bitcoin mining takes place in China. While a significant portion of this is done using renewable energy, coal remains the country’s biggest source of energy. Mining operations in Inner Mongolia were recently curtailed after failing to meet the standards of a government-mandated energy efficiency review.
Regardless of attempts to utilize green energy, Bitcoin currently suffers from an image problem in the form of a “massive carbon footprint,” as described by Forbes in a recent article. In February, a self-professed “green hacker” called for the destruction of Bitcoin on the basis that it is immensely damaging to the environment.
As the Bitcoin network consumes as much energy as a mid-sized country on a daily basis, some companies, like Jack Dorsey’s Square, have allocated funds to green Bitcoin mining projects in an effort to further alleviate the cryptocurrency’s reliance on fossil fuels.
Crypto Mining Stocks Could Keep Beating Bitcoin In ‘Modern-Age Digital Gold Rush’
Crypto mining stocks could deliver amplified returns during a bitcoin bull market, according to FundStrat research.
Over the past year, crypto mining stocks have outperformed bitcoin (BTC, -2.59%) (BTC), and the trend has accelerated since the cryptocurrency climbed past $20,000 a few months ago, according to the financial research firm FundStrat.
The dynamic might hold if bitcoin stays in a bull market, the firm predicts.
* “Bitcoin and the wider crypto market are the modern-age digital gold rush,” wrote FundStrat, which means crypto mining stocks could see further upside.
* Because “miners play such a critical role in ensuring the Bitcoin network functions properly, investors have sought opportunities to gain exposure to mining companies,” which generate revenue in the form of mined bitcoin.
* The largest publicly listed mining companies include Riot Blockchain (NASDAQ: RIOT), Hive Blockchain (OTCMKTS: HVBTF), and Marathon Patent Group (NASDAQ: MARA).
* As the bitcoin price increases, miners spin up new rigs or upgrade hardware in pursuit of higher block rewards. And FundStrat expects more-efficient mining machines will help some firms remain competitive, which could boost profit margins.
* But buyer beware: “Mining company equities may serve as a high-beta play on bitcoin … [and when the cryptocurrency] enters a bear cycle, we would expect mining equities to have greater downside volatility than bitcoin,” according to FundStrat.
Pakistani Province To Pilot Crypto Mining Farms
The Pakistani province of Khyber Pakhtunkhwa will build two pilot cryptocurrency mining firms as part of a new state policy.
The Pakistani province of Khyber Pakhtunkhwa, or KP, has formed a federal committee to create a new cryptocurrency policy including government-backed crypto mining.
As part of the new policy, the KP Crypto Advisory Committee has already decided to pilot two hydroelectric-powered crypto mining farms, a minister overseeing the policy told Reuters.
The committee held its first meeting on March 17, Zia Ullah Bangash, advisor to the provincial government on science and technology announced on Twitter. “The KP Government on the directions and guidance of chief minister Mahmood Khan is taking serious steps regarding cryptocurrency and mining. We’re consulting with all stakeholders and experts for this initiative,” Bangash wrote.
The KP Crypto Advisory Committee was formed in order to review and discuss “necessary steps to regulate, legalise, and necessary legislation.” Local crypto advocate and influencer Waqar Zaka apparently played a significant role in setting up the committee, claiming that he was the one who convinced the local government to launch the initiative. “I’m thankful to Waqar Zaka for his full cooperation and support to the KP government,” Bangash said.
According to local reports, the KP is the first of four provinces in Pakistan to launch an advisory committee focused on crypto and mining. The province has been urging the central government to legalize crypto, going so far as to pass a resolution in December 2020 that demanded legislative action on a federal level.
The State Bank of Pakistan banned crypto in the country in 2018, declaring that cryptocurrencies like Bitcoin (BTC) were not legal tender. Despite the years of an official ban, Pakistan residents apparently did not stop investing in crypto. “It’s really just our government that is not participating right now, people all over Pakistan are already working on this, either mining or trading in cryptocurrencies and they are earning an income from it,” Bangash said.
Riot Blockchain Stock Plunges With Bitcoin As Market Correction Deepens
RIOT stock was down by as much as 14.4% on Thursday.
Shares of Riot Blockchain (RIOT) and other cryptocurrency miners sold off sharply on Thursday, as Bitcoin’s (BTC) gravitational pull on the market continued to broaden.
RIOT declined by as much as 14.4% during Thursday’s session, extending its losing streak to four days. The stock has declined 29% over that stretch and is down over 44% from its all-time closing high on February 17.
At the time of writing, RIOT had pared most of its daily losses to trade above $43.00. Its market cap currently stands at just under $3 billion.
RIOT wasn’t the only crypto-focused stock to decline on Thursday. Shares of Marathon Digital Holdings (MARA), Hive Blockchain (HIVE) and Hut 8 (HUT) all posted heavy losses.
The selloff by crypto miners coincides with a sharp correction in the price of Bitcoin, as the flagship cryptocurrency struggled to find support despite bullish industry news. Bitcoin’s price bottomed at $50,360 on Thursday, according to TradingView data. It has since reclaimed the $51,000 level, having declined over 9% in the last 24 hours.
As Cointelegraph recently reported, a strengthening U.S. dollar may have taken the sails out of the BTC rally after Federal Reserve Chairman Jerome Powell hinted that monetary stimulus could be withdrawn due to substantial progress in the economy.
Publicly-traded companies like Riot Blockchain provide investors with indirect exposure to digital assets like Bitcoin. With a strong focus on Bitcoin mining, Riot’s fortunes reflect underlying demand for the digital currency.
Investors can also gain exposure to Riot through JPMorgan Chase’s Cryptocurrency Exposure Basket, a new debt instrument that consists of 11 U.S.-listed companies. Riot is listed alongside MicroStrategy, Square and Nvidia, among others.
Riot’s stock price surged alongside Bitcoin in the first quarter, with the company announcing that it expects to meet its hash rate capacity in the calendar year.
US Miner Blockcap Plans To Have 40,000 ASICs Operational By Q4
Despite launching in December, Blockcap plans to possess an operational hash rate of 3.5 EH/s by 2022.
Blockcap, one of the largest Bitcoin mining firms in North America, has added more than 12,000 additional Bitmain Antminer S19s to its inventory.
The firm — which currently mines approximately 6 Bitcoin (BTC) each day — is now expecting to deploy more than 40,000 Bitcoin miners by the fourth quarter and projects an operational hash rate of roughly 3.5 exahashes per second, or EH/s. This would equal roughly 2% of BTC’s current combined hash rate of 171.3 EH/s.
Reportedly combining the assets of five pre-existing mining companies, Blockcap was founded in December 2020 by veterans of major blockchain-hosting company Core Scientific.
After launching with roughly 13,000 Antminer S19s, and 500 upgraded S17s, Blockcap added another 10,000 S19s to its inventory in mid-February before acquiring 8,400 new-generation miners earlier this month from Canaan. Blockcap estimates its mining hardware is valued at $270 million on the secondary markets.
In an announcement, Darin Feinsten, Blockcap’s executive chairman, emphasized the company’s intention to bolster U.S.-based hashing power:
“With this latest hardware acquisition, we are doubling down on our mission to become a world leader in the mining of bitcoin and other digital assets. We are moving at high speed to position the United States as a global player in this increasingly strategic industry.”
Bitcoin mining firms are increasingly capturing the imagination of traders. Fundstrat analyst Leeor Shimron recently noted that on average, the four largest publicly listed mining firms outperformed BTC by 455% over the past 12 months.
“Until a Bitcoin ETF is approved, investors may view public mining companies as one of the only ways to get exposure to Bitcoin,” he speculated.
On March 22, Greenidge Generation announced its plans to go public by combining with Support.com. Greenidge anticipates its shares will trade on the Nasdaq. Majority-owned by private equity firm Atlas Holdings, the company possesses its own power generation facility in Upstate New York.
Argo Blockchain To Launch Clean Energy Bitcoin Mining Pool
Hydroelectric energy will power a new Bitcoin mining pool following Argo’s partnership with DMG Blockchain.
Publicly-traded cryptocurrency mining firm Argo Blockchain will launch a Bitcoin (BTC) mining pool powered solely by clean energy, the company announced on March 26.
Argo has partnered with fellow eco-friendly mining firm DMG Blockchain to create Terra Pool — a Bitcoin mining pool consisting of a hash rate derived from both company’s hydroelectric power sources, which the firm claims is the first of is kind.
Argo Blockchain PLC is a United Kingdom-based mining company with three operational facilities in Canada set up to mine Bitcoin, and the privacy coin, Zcash (ZEC). The firm recently acquired a 320-acre plot of land in Texas, which it plans to use to expand its mining operations with an additional 200-megawatts of electrical power, also derived from renewable energy sources.
Chief Executive of Argo, Peter Wall, Said Making Bitcoin More Green Was A Major Priority, And Urged Other Bitcoin Mining Companies To Follow Suit:
“Addressing climate change is a priority for Argo and partnering with DMG to create the first ‘green’ Bitcoin mining pool is an important step towards protecting our planet now and for generations to come. We are hopeful other companies within the Bitcoin mining industry follow in our footsteps to demonstrate broader climate consciousness.”
Bitcoin’s energy usage rose to match the yearly consumption of the country of Chile last month, a fact that critics and skeptics are quick to point out. However, few think to level the same criticisms at a technology like the internet, which already uses more energy than Bitcoin, and like cryptocurrencies, has yet to expand to anything close to global usage.
“[DMG’s] focus on eco-friendly Bitcoin mining has the opportunity to drive transformations in how the Bitcoin mining community acts towards a climate-conscious future. DMG’s ongoing commitment to clean energy-based capital deployment is a key industry development,” said chief executive of DMG Dan Reitzik.
Hut 8 Buys $30M Worth of Nvidia’s New Crypto Mining GPUs
The batch of processors will add 1,600 GH to Hut 8’s mining capacity.
Hut 8 (HUT) has purchased $30 million of Nvidia’s new crypto mining-specific graphics processing units (GPU) to help the company expand into mining for other cryptocurrencies besides bitcoin (BTC, +6.82%).
Called a Cryptocurrency Mining Processor (CMP), the new GPU was launched earlier this year to target professional cryptocurrency miners. Nvidia introduced the GPU, in part, to steer those miners away from its other GPUs following complaints by the company’s core gaming customers frustrated by shortages caused by miner demand.
In the company’s Q4 earnings call, Nvidia CEO Colette Kress said she expected about $50 million in total CMP sales during the new product’s first quarter this year, per CoinDesk’s prior reporting. Hut 8 filled 60% of that target in one order.
The machines “open up new opportunities” for Hut 8’s plans for diversified revenue streams, said CEO Jamie Leverton in a statement. The new CMPs will add roughly 1,600 GH of power to the firm’s mining capacity, which it will use to mine alternate blockchains. Hut 8 expects full delivery and deployment of the CMPs this summer.
Allocating mining capacity to alternate blockchains like Ethereum “has been rewarded handsomely by public market investors as seen by the stock price of Hive compared to [its] Canadian-traded counterparts who have focused on Bitcoin to date,” said Ethan Vera, co-founder of Seattle-based mining company Luxor Technology, in a direct message with CoinDesk. Now Hut 8 wants some of the profit.
Shares of the Toronto-based company have gained 130% year to date to just above $7. Bitcoin has climbed 77% over the same period.
Bitcoin Mining Difficulty Hits All-Time High As Delayed ASIC Shipments Come Online
The adjustment, spurred forth by fleets of newly booted ASICs, could be a harbinger of even larger difficulty increases in the coming year.
Bitcoin’s mining difficulty hit an all-time high today after a roughly 6% increase, a move that follows a record month in earnings for Bitcoin miners as new-generation ASICs come online.
“Difficulty” refers to the relative measure of the amount of resources required to mine bitcoin (BTC, +1%). This measurement climbs or falls depending on the amount of power consumed (or “hashrate” produced) by the network at a given time.
Bitcoin is programmed to adjust its difficulty level every 2,016 blocks, or roughly every 2 weeks to ensure that new blocks are mined at a stable rate.
This difficulty is measured on a relative scoring scale where Bitcoin launched with a mining difficulty of “1,” the lowest it’s ever been. (Difficulty kind of works like Google Search scores in that the scoring system is internal and has no reference point or unit for measurement outside of the networks themselves).
As of today’s adjustment, Bitcoin’s current mining difficulty is 23.1 trillion, according to data pulled from this CoinDesk journalist’s Bitcoin node. Per figures from BTC.com, this is a roughly 6% increase from its last level of 21.8 trillion, which makes it the second largest adjustment of the year and the fifth upward adjustment in the last six difficulty periods.
The difficulty adjustment is arguably one of Bitcoin’s most important features as it ensures block times remain relatively stable while also preventing a large miner from eating up too much hashrate.
New ASICs Online Lead To Increased Difficulty, Hashrate
This latest adjustment is a notable bump, Compass mining CEO Whit Gibbs told CoinDesk, because it’s likely attributable to tens of thousands of new machines coming online that were previously on backorder in the ASIC supply chain.
He said the current adjustment is just a sampler of the flood of hashrate that will come online in 2022 as more backordered shipments are filled.
“Today’s moderately large difficulty increase is not surprising, and I expect it’s only a taste of what will come later in this year and into 2022, as delayed machine shipments start arriving and being deployed. The pending flood of hashrate about to enter the market will only continue pushing bitcoin’s mining difficulty higher, which should track with bitcoin’s price,” Gibbs said.
As bitcoin’s price has gone stratospheric, mining investments are shooting the moon along with it. North American miners like Hut 8, Marathon, Blockcap and others have used 2021 as an opportunity to aggressively expand operational capacity.
As these machines come online, Bitcoin’s hashrate and difficulty are rising in step with miner revenues, which hit a record $1.5 billion in the month of March.
Riot Blockchain’s Hashing Capacity Grew 460% In 2020: Report
Riot Blockchain has published its 2020 financials and revealed it has increased its hashrate by 460%.
According to its latest annual financial report, leading U.S.-based mining firm Riot Blockchain increased its hashing capacity by 460% and more than doubled the amount of Bitcoin held on its balance sheet in 2020.
Riot saw a 78% growth in total mining revenues from $6.7 million to $12 million, owing to the increase in operational hash rate from 101 pentahashes per second, or PH/s, as of December 2019 to 566 PH/s as of December 31.
While the company said it achieved profitability in the fourth quarter with $3.9 million in net income on a GAAP basis, Riot posted an overall net loss of $12.7 million for 2020.
However, this was an improvement over its 2019 performance, when it posted a net loss of roughly $20 million.
The company increased its cash and cryptocurrency holdings from $11.3 million in 2019 to $235 million last year, and doubled its Bitcoin holdings from 514 BTC to 1078 BTC — with its BTC stash worth roughly $63.6 million at the time of writing.
Riot noted that it is still reliant on equity and debt financing to fund its operations, with its deficit increasing from $221 million as of Q2 2020 to $299 million at the end of the fourth quarter.
The firm celebrated its “strategic decision to solely focus on Bitcoin mining” throughout 2020, positioning Riot as a leading miner globally by hash rate.
“We are pleased to have invested into continuing our deployed hash rate growth, allowing us to capitalize on the extraordinary current opportunities in Bitcoin mining.”
Riot is one of the four largest publicly traded Bitcoin mining firms alongside Marathon Digital Holdings, Hut 8, and Hive Blockchain. Despite all four firms reportedly operating at a loss, their stocks outperformed Bitcoin by 455% over the past 12 months on average.
Blockcap, one of North America’s fastest-growing Bitcoin mining firms, currently mines around seven Bitcoin per day, with the firm set to expand its output to 30,000 per day by the end of 2021, after they closed off two investment rounds with a combined haul of $75 million.
Riot’s shares tagged an all-time high of $77 on Feb. 17 but have since fallen 30%. By contrast, BTC is up roughly 15% since Feb. 17, having posted a record high of $61,700 on March 13.
Marathon Digital Stock Soars After Company Ramps Up BTC Mining In Q1
The company mined 196 BTC in the first quarter, bringing its total holdings to 5,143.2 BTC.
Shares of Marathon Digital Holdings (MARA) surged on Monday after the cryptocurrency miner announced a significant increase in mining capacity in the first quarter, allowing it to up its stake in Bitcoin (BTC) by a considerable margin.
MARA stock jumped 15.8% to close at $56.56, marking a new all-time high. The crypto mining stock rose by as much as 17.1% earlier in the day.
By comparison, the technology-focused Nasdaq Composite Index rose 1.7% on Monday. Meanwhile, the Bitwise 10 Crypto Index Fund advanced 1.9%
At current values, Marathon Digital has a total market capitalization of $5.6 billion, putting it among the largest crypto proxy stocks.
Marathon mined 196 BTC in the quarter ending March 31, bringing its total holdings to 5,134.2 BTC, the company announced Monday. At current values, Marathon’s Bitcoin holdings are worth nearly $302 million.
In addition to mining the digital asset, Marathon purchased 4,812.66 BTC in January at an average price of $31,168.
The company was able to scale up its mining operations in the first quarter after receiving 10,300 S-19 Pro ASIC miners from Bitmain. Marathon’s mining fleet now consists of 5,800 miners collectively generating 0.71 exahashes per second in hashing power.
Cash on hand at the company was $212 million at the end of the first quarter. Total liquidity, which is defined as cash and BTC holdings, was worth approximately $513.9 million.
As Cointelegraph recently reported, Marathon plans to divert all hashing power to its new, regulatory compliant mining pool on May 1. The mining pool has been set up to adhere to all U.S. Anti-Money Laundering guidelines and other regulators set forth by the Office of Foreign Assets Control.
Riot Blockchain Purchases 42,000 Antminers From Bitmain
The $138.5 million deal will add an estimated 3.7 EH/s to Riot’s existing and planned mining capacity.
Riot Blockchain, a cryptocurrency mining company, has expanded its fleet and mining capacity with a new purchase order for 42,000 S19j Antminers from Bitmain.
Megan Brooks, Riot’s COO, said the latest purchase order positions her company and the United States at the center of the Bitcoin mining industry:
“By nearly doubling its planned hash rate capacity, Riot continues to take great strides forward in growing both the Company’s and the United States’ share of the global network hash rate. We are proud of this accomplishment and remain focused on continuing to evaluate additional opportunities in the space.”
The purchase order, valued at $138.5 million, is part of a coordinated growth plan to significantly increase Riot’s Bitcoin (BTC) mining hash rate. As a result of the current and previous orders, Riot said it is scheduled to receive a minimum of 3,500 S19j Antminers per month beginning in November and running through October 2022.
As Cointelegraph previously reported, Riot expects to achieve a hash rate capacity of 3.8 exahash per second by the end of 2021. Once deployed, the new order of 42,000 Antminers will more than double the capacity to 7.7 EH/s.
Once fully operational, Riot’s mining fleet will consist of 81,150 Antminers, of which 95% are the latest generation S19 miners.
Shares of Riot Blockchain were down sharply Wednesday, reflecting the overall downtrend in the cryptocurrency market. The stock is down 7% at the time of publication and has corrected 36% from last month’s all-time high. Astonishingly, Riot’s 52-week low is $0.93. It peaked at $79.50 in mid-March and currently trades just above $50 a share.
Miners Are Hoarding Bitcoin From Record Daily Earnings
Miners are back in accumulation mode, with 5,000 BTC added to Bitcoin’s unspent supply since the start of February.
Bitcoin (BTC) miners are stashing away their coins for higher prices, with direct transfers from miners to exchanges having plummeted nearly 40% since mid-March.
Data from on-chain analytics provider Glassnode shows that miners’ BTC balances have been increasing since late March, following heavy outflows throughout January and consistently reduced selling during February and earlier in March.
Glassnode chief technology officer Rafael Schultze-Kraft noted several metrics pointing to recent miner accumulation — including flows from miner addresses, unspent BTC supply and miner position net change.
Glassnode’s data shows that unspent supply — BTC that has never been transferred from the (miner’s) original recipient address — has begun to rise after seeing a sharp drop in January, when 15,000 previously dormant coins were moved from mining addresses for the first time.
Since February, roughly 5,000 newly minted BTC have been added to Bitcoin’s unspent supply, bringing the total up to 1.765 million Bitcoin.
Direct transfers from miner wallets to exchanges have also dropped substantially in recent weeks, falling from a 30-day moving average of nearly 450 BTC in mid-March to 275 BTC today.
Schultze-Kraft described Bitcoin mining as showing “great fundamentals,” noting a new all-time high for daily hash rate of 178 exahashes per second on Tuesday and new record highs for Bitcoin mining difficulty.
He also shared data showing that miner revenues are up by 300% in roughly one year, pushing into new all-time highs above $50 million to currently sit at a seven-day moving average of nearly $60 million.
“Miners have little to no incentives to be cashing out right now,” he concluded, adding “selling or capitulation [is] not in sight.”
The apparent prosperity of Bitcoin miners can be seen in the share performance of North America’s listed mining firms, with recent analysis finding the stocks of the four-largest publicly traded Bitcoin mining companies gained 5,000% in 12 months, while spot BTC prices went up 900% over the same period.
Bitcoin Miners Are Again Stacking Coins In A Positive Sign For The Market
“Miners may be holding in anticipation of a price rally,” one analyst said.
Blockchain data shows bitcoin (BTC, +0.47%) miners are accumulating coins and adding to bullish pressures in the market for the first time since December.
Analytics firm Glassnode’s miner position change metric, which gauges the 30-day change in the supply held in the miners’ addresses, recently turned positive in a sign of renewed holding by those responsible for making coins.
The balance held in miner wallets has increased by 4,435 BTC to 1.806 million over the past two weeks, Glassnode’s data shows.
“Miners [now] have a net accumulation of liquid assets as they have enough cash in reserve to run their future operations, having liquidated holdings when the bitcoin price was between $20,000 and $40,000, or most of them are holding in anticipation of a price rally,” Flex Yang, CEO of Hong Kong-based Babel Finance, said in an email.
Miners predominantly operate on cash and liquidate holdings to meet expenses. However, the pace of miner selling varies from time to time depending on mining-specific factors and bitcoin’s price expectations.
The return to accumulation mode observed since March 31 comes after almost four months of largely negative readings – miners decreasing positions and taking profits. Peak distribution of roughly 17,000 BTC to 24,000 BTC was seen throughout January, according to Glassnode’s weekly newsletter, dated March 8.
While miner flows constitute a small part of the total network volume, as tweeted by Glassnode’s CEO Rafael Schultze-Kraft, accumulation by miners is analogous to increased promoter holding of corporate stock and is considered a positive indicator. “Their spending patterns provide insight into the sentiment of some of the biggest bulls in the Bitcoin market,” Glassnode said in a newsletter published on April 5.
Whales, or large investors with the ability to influence prices, have also stopped selling coins.
The number of whale entities – clusters of crypto wallet addresses held by a single network participant holding at least 1,000 bitcoin – has steadied above 2,000 since March 31.
The figure dropped from 2,230 to 2,004 in nearly two months to March 31, mainly due to quarter-end rebalancing, according to blockchain analyst Willy Woo. It remains to be seen if these positive on-chain developments fuel the next leg higher in the cryptocurrency.
While bitcoin is currently trading moderately higher on the day near $58,500, it remains trapped in a narrowing price range. A breakout would mark a continuation of the broader uptrend typically experienced in the seasonally strong month of April.
Bitcoin Mining Company Follows Tesla By Setting Up Shop In Austin
Tech companies like Oracle, Tesla, Hewlett Packard, and now Blockcap are moving to Austin, causing many to call the state capital the Silicon Hills.
North America-based crypto mining company Blockcap announced over the weekend it would be establishing new offices in Austin, Texas.
In an announcement from Blockcap on Friday, the mining company claimed once its new facilities are operational in the Lone Star State’s capital, its hashing power will be roughly 3.5 exahash per second from a total of 42,000 rigs, reportedly doubling its capabilities.
According to blockchain data, this would represent more than 2% of the hashrate for the entire Bitcoin (BTC) network, roughly 167 million terahash per second at the time of publication. However, Blockcap claims its total fleet will account for only 1% of the network’s hashing power.
“Austin is our home base from which we will pursue our mission and bring this great city closer to the center of the United States’ blockchain technology ecosystem,” said Blockcap chair and founder Darin Feinstein. “We also see the city as an ideal location from which to continue expanding our operations as we grow at both national and international levels.”
Blockcap cited electric car manufacturer Tesla setting up one of its “Gigafactories” in Austin in announcing the move. Tesla CEO and billionaire Elon Musk recently purchased a home in the Texas state capital for more than $3 million on Lake Austin west of the downtown area, while the firm is breaking ground on the Gigafactory on the east side closer to the Austin-Bergstrom International Airport.
The mining company did not immediately respond to questions regarding where it plans to establish its offices in the Austin area or how many jobs would be created as a result, though Feinstein said it would be “hiring locally.” Musk said in a tweet last month that the new Giga Texas location would bring in more than 10,000 jobs, effectively increasing the number of employees at the electric car manufacturing company by more than 14%.
Though some tech companies like Oracle and Hewlett Packard are moving to Austin — causing many to dub the city the “Silicon Hills,” in reference to Silicon Valley — the state capital has in many ways become a microcosm of the U.S. housing market.
Many employees of these firms may be seeing all-cash buyers purchasing homes, making them unavailable to those with only the financial means of saving for a 20% down payment. Musk highlighted the dearth of Austin housing in an April 4 tweet, seemingly in reference to Tesla employees relocating there.
However, the addition of Blockcap and other blockchain firms to the Lone Star State has the support of former Texas governor Rick Perry, the Republican politician who once famously forgot the name of the Department of Energy as a federal agency he would eliminate if elected president.
Perry claimed Texas had “become the premier location for forward-looking industries like blockchain” and that Blockcap would likely lead to job creation and economic growth in the state.
Founded in 2020 by a group of blockchain veterans, Blockcap now controls roughly 12,000 mining rigs generating more than 7 BTC daily, or $416,550 at the time of publication. The company raised more than $75 million in two funding rounds led by Off The Chain Capital and Foundry Digital. According to Blockcap, the firm recently acquired more than $500 million worth of Bitcoin mining machines.
Riot Blockchain Bitcoin Production Jumps 80% Over Pre-Halving Levels
The company said it held more than $94 million in crypto as of March 31, all from Bitcoin it has mined.
In an announcement on Monday, Riot Blockchain reported that it produced 187 Bitcoin (BTC) — roughly $11.2 million — last month, an 80% increase over its BTC mining in March 2020. The company said it held more than 1,565 Bitcoin on its balance sheet as of March 31, representing more than $94 million in crypto.
The mining report follows Riot’s $138 million purchase of 42,000 S19j Antminers from crypto mining giant Bitmain. Roughly 6% of the rigs — 2,400 Antminers — are reportedly already on route to Coinmint’s facility in New York, where Riot runs a portion of its mining operations. By the end of April, Riot claimed it will have 16,146 Antminers in operation capable of producing 1.6 exahashes per second.
As more of the Antminers are put into operation, Riot expects its hashing power to rise significantly. By the end of the year, the mining firm expects to achieve a hash rate capacity of 3.8 EH/s, while the total fleet capacity of 81,146 Antminers — expected to be fully operational before the fourth quarter of 2022 — may produce a hash rate of 7.7 EH/s. According to blockchain data, this would represent more than 4% of the hash rate of the entire Bitcoin network, roughly 171 million terahashes per second at the time of publication.
Riot is also reportedly planning to purchase a major mining facility in the state of Texas. The mining firm said last week that it would buy the Northern Data-owned Whinstone company for $650 million. The deal would seemingly allow Riot to run its rigs in Texas with a total capacity of 750 megawatts, with an additional 300 MW expansion planned.
North American Crypto Miners Prepare To Challenge China’s Dominance
“Just consider that half of the network’s hashrate is physically located in China, that’s a major security risk.”
Springtime is coming to the North American cryptocurrency mining industry. With access to robust capital markets, cheap power, a stable political climate and increasing participation of technological innovators, industrial-grade mining operations are burgeoning in the United States and Canada, providing competition to Chinese mining pools that now control more than half of the world’s hashing power.
These new ventures are acutely aware of the need to minimize mining’s carbon footprint. In March, when Neptune Digital Assets and Link Global announced they would develop a new five-megawatt Bitcoin mining facility in Alberta, Canada, for instance, Neptune CEO Cale Moodie cited the “substantial global pressure to develop sustainable [emphasis added] Bitcoin mining operations around the world” — adding that the project would be powered by solar, wind and natural gas.
“A large investment in North America mining infrastructure is currently taking place,” Ethan Vera, co-founder and chief financial officer of Luxor Technologies and of Hashrate Index, tells Magazine, while CoinShares chief strategy officer Meltem Demirors writes in a recent blog post: “We have seen over $200M of capital deployed into building onshore mining capacity in the United States alone.”
“There’s an upwards trend in mining companies looking at the U.S. and North America,” Amy Davine Kim, chief policy officer of the Chamber of Digital Commerce, tells Magazine, and there is a growing willingness among some U.S. states to support such crypto mining ventures. Kentucky, for instance, passed two bills in March that give tax breaks to crypto miners, whom the state wants to attract in order to create jobs and energize local economies.
“North American capital has been unleashed,” Vera explains, adding: “Public and private markets are pouring money into Bitcoin mining,” and it is all setting the stage “for large-scale North American build-out.”
What Took So Long?
Some wonder how and why Western nations allowed China to take such a lead in crypto mining in the first place. China now accounts for 65% of global BTC mining, according to the Cambridge Centre for Alternative Finance. This is compared with only 7.24% for the U.S., which is the second-largest hub, though no one really knows the global distribution with certainty.
Some have pegged the Chinese share to be lower. For example, a 2020 study commissioned by Fidelity Investments estimates that 50% of global mining power capacity is “likely” in China, with 14% in the United States.
Meanwhile, an April 6 paper written by academics from the University of the Chinese Academy of Sciences, Tsinghua University, Cornell University and the University of Surrey in Nature Communications, a peer-reviewed journal, estimates the Chinese share to be much higher: “As of April 2020, China accounts for more than 75% of Bitcoin blockchain operation around the world.”
The paper goes on to explain that some of China’s rural areas are considered an “ideal destination for Bitcoin mining” because of cheaper electricity prices and large tracts of undeveloped land for mining pool construction.
“In the early days, the Wild-West nature of the mining industry held back major investments,” says Vera, explaining how Bitcoin mining became so geographically skewed. “The opaqueness of the ASIC supply chain” — the application-specific integrated circuits that are specifically designed to perform the hashing calculations demanded of miners — “and mining pool auditability led capital to be sidelined.”
With regard to “auditability,” he further explains that “Most miners didn’t know if they were getting underpaid for their hashrate to mining pools. If mining pools quoted them a fee it was very hard to check that was the actual fee being charged.
In many cases miners blamed mining pools for underpayment.” More recently, however, “There has been a large improvement in the mining supply chain professionalism,” Vera adds.
China’s dominance is perhaps better explained in macro terms, suggests Yu Xiong, associate dean international at Surrey University and chair of business analytics at Surrey Business School — and one of the authors of the Nature Communications paper.
North America is saddled with higher labor costs and energy costs than China, which leads the world with roughly 30% of global hydropower capacity and a 50% share of coal power generation. “Those facilitated the mining industry in China,” Xiong tells Magazine.
Chase Lochmiller, CEO and co-founder of Crusoe Energy Systems — a Colorado company that uses waste gas from oil well sites to power Bitcoin mining rigs — tells Magazine that more miners are now migrating to North America, driven by the increased attention paid to BTC by investors and society in general.
Bitcoin Mining “Slammed” By Environmentalists
Any movement to North America could also invite further scrutiny from environmentalists who have attacked Bitcoin’s prodigious consumption of energy — and its related climate-threatening emissions.
The annualized energy consumption of the Bitcoin mining industry in China alone will peak in 2024 at 296.59 terawatt-hours, according to the Nature Communications paper, which “exceeds the total energy consumption level of Italy and Saudi Arabia” in 2016.
In March, Bank of America analysts “slammed” Bitcoin mining for its environmental wantonness, noting that “A single Bitcoin purchase at a price of ~$50,000 has a carbon footprint of 270 tons, the equivalent of 60 ICE [internal combustion engine] cars.”
The proof-of-work consensus mechanism used to verify Bitcoin transactions requires would-be miners to compete against each other to solve complicated mathematical puzzles.
Computers, such as ASICs, specially built to solve those problems burn through immense amounts of electricity. Miners that solve the puzzle get to form and confirm the next “block” of transactions, and they receive BTC as a reward for their efforts.
Still, “This is a security feature of PoW not a bug,” says Vera. If the puzzles to be solved — the answers to which are called “hashes” — are too easy to solve, the network invites denial-of-service attacks from hackers.
Lochmiller says that high energy usage in itself is “not necessarily a bad thing” if it is done right. Crusoe Energy, for instance, has developed a technology that captures the natural gas that is “flared” into the atmosphere at oil well sites and uses this waste gas “to power modular data centers [mining rigs] deployed directly at the wellsite.”
When co-locating rigs in this manner — as the company has done in Colorado, Montana, Wyoming and North Dakota — the result is an overall 71% reduction in CO2 emissions when compared with flaring, Lochmiller tells Magazine. “It’s a net benefit to the environment, and a net advantage to BTC.”
The ecological challenges attached to crypto mining “are easily addressable,” Clark Swanson, CEO of Blockcap — one of the largest Bitcoin mining operations in North America — tells Magazine, adding:
“The Bitcoin network is the first use of energy that does not require its source of energy to be co-located near the end user population.”
Swanson stresses that BTC mining is moving toward making renewables the primary source “and perhaps one day the sole source of energy to the Bitcoin network.” Even today, Blockcap utilizes power that achieves a nearly 50% carbon-neutral output.
“We are continuing to drive our carbon-emission target to neutral.” At present, however, most Bitcoin mining globally is not powered by renewable energy sources like solar, wind or hydro. According to the Cambridge Centre for Alternative Finance, “39% of hashing’s total energy consumption comes from renewables.”
Not all are impressed by recent measures, however. Alex de Vries, founder of Digiconomist, calls the co-location solution preposterous, telling Magazine: “We’re not having a climate change problem because fossil fuel extraction is not efficient enough.” He adds:
“Using a byproduct of fossil fuel extraction still means Bitcoin is running on fossil fuels, and it only adds to the bottom line of fossil fuel companies.”
De Vries admits that solar panels provide green energy and are an improvement over using flared gas, “but so far the only substantial source of renewable energy going into the Bitcoin network is dodgy hydropower that can only be obtained for just a couple of months per year,” as is the case in China’s Sichuan province — the world’s largest BTC mining hub.
Even if the Bitcoin network were to run entirely on renewable energy, continues de Vries, it wouldn’t solve all its PoW-related problems. “This network runs on highly specialized equipment that cannot be repurposed,” and the growing demand for the ASIC machinery “already adds to the disruption in the global semiconductor supply chain.”
The end result will be “a substantial pile of electronic waste on top of all that energy consumption. No amount of green energy can fix that.”
Optics will become more important, arguably, if the mining industry’s center of gravity shifts from China to North America, where regulators and environmentalists might be more sensitive than China’s energy authorities to the industry’s energy consumption and carbon footprint.
A Security Risk?
Beyond the energy and environmental questions, others see significant security risks in Bitcoin’s consensus mechanism. “Just consider that half of the network’s hashrate is physically located in China,” says de Vries. “That’s a major security risk.”
Something similar was suggested by Ripple co-founder Chris Larsen in an opinion piece for The Hill in August 2020. He wrote: “At least 65 percent of cryptocurrency mining is concentrated in China, which means the Chinese government has the majority needed to wield control over those protocols and can effectively block or reverse transactions.”
Crypto Mining Will Be A Bridge To 100% Renewable Energy Production, Says Mike Colyer
“At some point Bitcoin mining will look like a utility, and it’s going to be a part of critical infrastructure for countries,” said the Foundry Digital CEO.
Mike Colyer, CEO of Foundry Digital, a crypto mining subsidiary of Digital Currency Group, says that mining Bitcoin could eventually help the world transition to green energy.
Speaking at the Crypto Mining Forum online event today, Colyer said he believes that as major energy companies see the economic benefits of mining cryptocurrencies like Bitcoin (BTC), it may lead to a restructuring of both capital and operations.
Calling Bitcoin mining “a great stabilizer” for the power grid, the Foundry Digital CEO said the technology could become a “bridge between the current energy production and a world where 100% of our energy is produced from renewables.”
“Bitcoin mining provides a steady base load and yet it’s still intermittent to allow grids stability,” said Colyer. “This creates a really powerful economic dynamic for renewable energy products.”
“Nation-states, they can’t sleep on this, and they’re going to find ways to take advantage of their natural resources to be involved in Bitcoin mining […] At some point Bitcoin mining will look like a utility, and it’s going to be a part of critical infrastructure for countries.”
Colyer cited examples in the U.S. of the technology moving forward including lawmakers in Kentucky pursuing tax breaks for local cryptocurrency miners, and New-York based Bitcoin mining company Greenidge Generation, which operates a power plant that runs only when there is high demand. According to the CEO, it could be a “10- to 20-year journey” for this transition to renewables to begin, but Bitcoin would likely play an important role.
According to Colyer, Digital Currency Group has now invested more than $225 million in North American cryptocurrency miners seemingly in an effort to make the U.S. competitive against other countries’ operations. China is still the leader in crypto mining, with one recent report suggesting that 75% of Bitcoin mining takes place in the country.
“Institutions have arrived. I can hardly keep up with the news every day of new Bitcoin mining companies. I’ve always thought the U.S. would be a leader in Bitcoin mining.”
US Firm Splashes Out On 4,800 Bitcoin Miners Worth $34M
A U.S. firm expects to double its Bitcoin hashing power after the purchase of 4,800 new S19J mining rigs from Bitmain.
Pennsylvania software firm Integrated Ventures has announced the purchase of 4,800 Bitcoin (BTC) mining rigs from Chinese manufacturer Bitmain. The deal is worth just over $34 million and will see 400 of Bitmain’s Antminer model S19J’s delivered to Integrated Ventures each month for the next year.
Integrated Ventures partnered with Wattum Management, a mining solutions provider, to carry out the deal, with Wattum expected to help host and manage INTV’s mining operations. The mining rigs deliver 100 terahashes each, giving IV close to 0.5 million TH/s by the time the full shipment of mining rigs is delivered in 2022.
Based on Bitcoin’s current hash rate of 170 million TH/s, this gives the firm a sizable, if still a relatively modest, share of the coin’s hashing power. It’s worth noting that Bitcoin’s hash rate doubled in the past year alone, meaning IV’s equipment could feasibly be worth much less come next year.
Perhaps with this in mind, INTV secured downside price protection for 12 months as part of the deal, as well as the right to replace the current S19J mining rigs with newer models when they are released in the coming year.
Few would expect the cryptocurrency market to remain static for any great length of time, however, INTV calculates expected revenues of between $19 million and $21 million in the next 12 months, based on the current Bitcoin price of around $60,000.
Integrated Ventures CEO Steve Rubakh said the deal effectively doubled the firm’s existing Bitcoin hashing power, adding that he was pleased to secure the purchase of mining equipment at a time when the hardware was scarce.
“The Company is very pleased to secure this large scale purchase agreement, especially during a period of scarce supply of mining hardware. Going forward, INTV is committed to deploy any raised capital for purchases of the mining equipment,” said Rubakh.
Canaan Reports $33M Net Loss For 2020 Despite Bullish Bitcoin Price Action
The Bitcoin miner manufacturer saw its year-on-year revenue tumble amid supply chain disruptions and a global chip shortage.
Bitcoin’s bullish 2020 closeout was not enough to prevent Canaan from incurring a net loss in 2020.
According to the company’s unaudited financial report for Q4 2020, the Bitcoin (BTC) miner maker’s net loss for 2020 was about $33 million. However, Canaan’s 2020 net loss is significantly lower than the $148 million recorded in 2019.
Indeed, the reduction in net loss for Canaan was a common theme across the company’s quarterly performance in 2020. As previously reported by Cointelegraph, significant growth in gross margin on the sale of mining rigs helped the company lessen its year-on-year net loss by over 90% in Q2 2020.
As part of the report issued on Monday, Canaan revealed that its 2020 net revenue amounted to about $68.6 million — a 66% decline from the revenue figures in the 2019 financials.
The marked revenue decline also meant Canaan’s year-on-year gross profit took a steep tumble falling from $79 million in 2019 to under $6 million in 2020.
However, despite the drop in net revenue, Canaan said the trend will reverse in 2021, with the company forecasting a $61-million net revenue target for Q1 2021.
Like other Chinese miners, Canaan’s crypto mining inventory is on backorder amid the ongoing global semiconductor shortage.
According to Canaan CEO Nancheng Zhang, the volume of pre-orders for the company’s Bitcoin mining hardware will drive revenue growth, stating:
“Although the outbreak of COVID-19 caused supply chain disruptions and thus negatively impacted our revenues in the fourth quarter of 2020, our market leadership has enabled us to attain $174 million contracted orders with $66 million of cash advance from customers as of December 31, 2020, thus laying a solid foundation for substantial revenue growth for 2021.”
At the time of writing, the stock price of the Nasdaq-listed Canaan is about 50% down from its 2021 high attained a month ago. Despite the drop, Canaan is still up 179% year-to-date.
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