The Weekly Hash, 11/15/21 Open Interest, Contango Stall; Modest Downside Risk to Our 198EH/s YE Hashrate Est

Bitcoin rose 3.2% week-on-week (WoW), settling at $65,032 as of midnight UTC on 11/14. Yesterday’s difficulty reset increased target Hashrate by 4.7% to 162 EH/s. While Hashrate is now modestly below our expectations at this point, published 9/16, we believe our 198EH/s year end estimate is intact. We do note a modest downside risk to that estimate, though. Please click here for the full version of our weekly hash report.

Contango on the CME has moderated vs a week ago, and open interest dipped 0.7% WoW to 13,565 lots. The Commitment of Traders data from 11/9 suggests that the drop in open interest is driven by a rotation from other and non-reportables to asset managers on the long side, and a contraction in leveraged investor positions. The net length on the CME is now short 421 lots for non-commercial players, from short 583 lots two weeks ago.

Total BTC earnings per PH/s are ~5.65 mBTC, down from ~5.86 mBTC / PH/s last week on increased difficulty (1mBTC or milliBTC = 1/1000 BTC). Transaction fees dropped 9 bps WoW to 0.9% of miner rewards, or 0.06 BTC per block. The “Mempool” currently shows low congestion levels with ~4,000 pending transactions. We continue to believe congestion will likely stay low for a while with the falloff of trading activity in Asia, where a higher percentage of on-exchange transactions result in on-chain transactions.

Bitcoin mining revenue fell to $367 / PH/s per day and $401/MWh on Sunday’s reset, with both the higher difficulty and the falling transaction fees offsetting price gains. However, miner economics appear on track to match or come in slightly better than our year end estimate so far. Actual Hashrate is within our confidence intervals, and we are leaving estimates unchanged for now.
The BitOoda North American Hash Spread™ fell 3.6% from $363 to $350 following an increase in national average power price.

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 $50.24 / MWh leads to an aggregate spread of $350.

Older-gen S9-class devices saw their Hash Spread™ down ~11% to $91/MWh. S17-class devices, the bulk of the installed base, saw a hash spread of about $202/ MWh.

It now takes 162 MWh to mine 1 BTC using S19-class rigs, while S17-class machines would consume 258 MWh, and S9-class, 461 MWh.

The 162 MWh required to mine 1 BTC with S19-class rigs translates into $8,156 in power expense. It costs $23,176 using S9 rigs, a ~64% margin, excluding labor.

Takeaways

•Bitcoin price remains bound within a ~10% range between $60–66,000

•Our 198EH/s YE Hashrate estimate is intact, supporting strong miner economics

•Traders are beginning to roll futures positions into December contracts, even as net length improved to short 421 lots

•Asset managers appear to be getting more bullish, offsetting reduced longs by other and non-reportable CME players