The Weekly Hash, 11/1/21: Dec CME Open Interest Expected to Rise as Oct Contracts Roll; Revenues Dip on Reset
Bitcoin gained 0.9% week-on-week (WoW), settling at $61,432 as of midnight UTC on 10/31. CME futures contango dropped across the curve, along with an Open Interest decline of ~23%. It appears that the futures roll for the Bitcoin ETFs is still incomplete, following the October contract expiry last week. Open Interest is now at 13,343 lots. Commercial interest increased on both long and short sides, and net length of non-commercial participants in the CME is now short 583 lots.
Price has (mostly) stayed above $60,000 for two weeks now. Yesterday’s reset saw a 7.85% difficulty increase, bringing target Hashrate to 155 EH/s. With four epochs left this year, difficulty would need to increase at ~6.5% per epoch for year-end target Hashrate to achieve our 198EH/s target.
Total BTC earnings per PH/s are ~6.25 mBTC, down from ~6.32 mBTC / PH/s last week (1mBTC or milliBTC = 1/1000 BTC). Transaction fees rose 15 bps WoW to 1.1% of miner rewards, or 0.07 BTC per block. Daily BTC revenue will decline further today, since yesterday showed only a partial impact of the reset. The “Mempool” shows almost no congestion, with only ~1,000 pending transactions.
Bitcoin mining revenue fell to $384 / PH/s per day and $419/MWh. Yesterday’s difficulty reset should reduce daily earnings further.
The BitOoda North American Hash Spread™ dropped 0.6% from $379 to $378 on a minor increase in power price, but will fall further today, with the full day reflecting the higher difficulty.
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. The weighted average around the clock U.S. wholesale industrial power price (5 markets) of $41.03 / MWh leads to an aggregate spread of $378.
Older-gen S9-class devices saw their Hash Spread™ down ~2% to $106/MWh. S17-class devices, the bulk of the installed base, saw a hash spread of about $223/ MWh.
It now takes 146 MWh to mine 1 BTC using S19-class rigs, while S17-class machines would consume 233 MWh, and S9-class, 417 MWh.
The 146 MWh required to mine 1 BTC with S19-class rigs translates into $6,020 in power expense. It costs $17,105 using S9 rigs, a ~72% margin, excluding labor.
•Bitcoin price has been range-bound recently around $60–65,000
•Bitcoin mining profitability is very strong and should remain attractive, even as Hashrate continues to increase.
•It would take ~6.5% difficulty increases for the four remaining epochs of 2021 to achieve our year-end estimate of 198EH/s, compared with the ~7.85% reset yesterday
•The CME open interest should rise significantly in December contracts this week — the October expiry has not yet been fully rolled forward, in our view
•Net non-commercial length of short 583 lots is near the record net short set in July