Introducing The Weekly Hash: Data supports continued Hashrate growth despite recent declines

BitOoda is excited to launch The Weekly Hash, our new publication on the state of Bitcoin mining.

We at BitOoda spend a lot of time researching Bitcoin mining and advising clients on projects, financing, and risk mitigation or yield enhancement strategies. With this new weekly piece, we are bringing some of that information and insights to a broader audience. As always, we welcome feedback.

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Bitcoin mining profitability is near recent highs.

With Bitcoin’s price now at $13,997 (midnight UTC, 11/4), we see a key divergence emerging compared with falling difficulty (down 16% at the last reset), and daily blocks since the reset still pointing to flattish difficulty. Daily revenue per PH/s is now $120, or $131 per MWh using the latest generation S19-class rigs.

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The BitOoda North American Hash Spread™ is now $92.35.

We define the BitOoda Hash Spread as the difference between the cost of power per MWh and the Bitcoin mining revenue per MWh. This gives miners a quick sense of the surplus generated by their business to cover personnel, overhead, depreciation, and profit. EIA data shows a weighted average peak/offpeak U.S. wholesale industrial power price of $39.06 / MWh, leading to an aggregate spread of $92.35 across 8 power markets.

Even older generation S9-class devices could be operated profitably, with favorable below-average or off-peak power purchase agreements.

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Bitcoin mining power consumption is currently estimated at 5.5GW.

Approximate observed network Hashrate is 123 EH/s, or 123,500 PH/s. Some Hashrate appears to be in transition as Chinese miners shut down and shift production from Yunnan / Sichuan provinces to northern China at the end of the hydro season (see here for our detailed research into Bitcoin mining). In addition, some older equipment such as S9-class rigs may remain shut down due to reduced profitability, given higher power prices in Northern China. Offsetting this, recent BTC price increases may make it worthwhile for some low-cost miners to extend S9 operations.

By our estimates, S9-class devices account for 10% of Hashrate and 23% of power consumption, but over 33% of installed devices in the network.

Bitcoin remains uncorrelated UNLESS the equity market is tanking.

We often hear discussion that centers around Bitcoin being an “uncorrelated” asset. This remains largely true, and there are many studies that show the positive impact even a small Bitcoin exposure can have on an overall portfolio. The correlation between S&P 500 daily returns and BTC daily returns since 1/1/2013 is just 7.6%, rising to 29% over the past 30 days.

But we identified a critical caveat: the correlation rises to over 50% for the 30 worst days in the S&P 500 since 2013 — in other words, the diversification benefit fails in risk-off markets. BTC is not yet a reliable flight-to-safety trade. We plan to dive deeper into this issue in the future.

Takeaways

Robust Hash Spreads are supportive of sustained Network Hashrate growth.

Mining power consumption of 5.5GW is well below capacity, further supporting Hashrate growth.

We remain bullish on the long-term prospects for Bitcoin and Blockchain applications, but we caution against prematurely viewing BTC as a hedge against equity exposure.

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