The Weekly Hash, 3/16/22: Annual Mined BTC Projected to Decay from 1.2BTC / PH/s in 2022 to 0.8BTC in 2023
Our current target Hashrate analysis calls for a back-end loaded growth in network Hashrate to 327EH/s by the end of 2022. Our longer-term estimates suggest 1600 EH/s is feasible by the end of the decade provided BTC price growth supports such expansion. Click here for the full report.
We currently model Transaction Fee growth over time to become the dominant source of miner revenue by 2028/2029 (slide 3). However, it will require increasing Tx volume growth and network congestion to achieve this, which we plan to examine in upcoming reports.
Daily revenue per PH/s would decline over time, stabilizing post the 2028 halving if Tx fees pick up (slide 4). As a result, a PH/s of mining capacity operating continuously would generate an estimated 0.8BTC in all of 2023, and just 0.12BTC in all of 2030, compared with 4.3BTC in 2020 and 1.4BTC in 2022 (slide 5).
Total BTC earnings per PH/s are ~4.61 mBTC, down fractionally from last week’s ~4.62 mBTC / PH/s (1mBTC or milliBTC = 1/1000 BTC). Transaction Fees fell 12 bps WoW to 1.1% of miner rewards, or 0.07 BTC per block. The “Mempool” shows low congestion, at 3,993 pending transactions.
Bitcoin mining revenue rose slightly to $183 / PH/s per day and $200/MWh, as of last night. The block pace is well above par in the last 24 hours, at 155, but is still modestly behind epoch to date.
The BitOoda North American Hash Spread™ rose 8.3% from $151 a week ago to $165. 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) is $35.04 / MWh, leading to an aggregate spread of $165. We note that many miners have fixed price power purchase agreements at lower levels, so their experienced profitability should be higher.
Older-gen S9-class devices saw their BitOoda Hash Spread™ down ~63% to $12/MWh — but still positive at power prices up to about 8c/ kWh ($80/MWh). S17-class devices, the bulk of the installed base, saw a Hash Spread of about $76/ MWh.
It now takes 199 MWh to mine 1 BTC using S19-class rigs, while S17-class machines consume 316 MWh, and S9-class, 565 MWh.
During an epoch, variability in MWh / BTC is driven by Tx Fee fluctuations; a slight decline in fees leads to a slight week-on-week increase in MWh needed to mine 1 BTC.
The current power prices translates into $6,962 in power expense to mine 1 BTC with S19-class rigs and $19,804 using S9 rigs, excluding labor.
Takeaways
•Mining margins have mean reverted, with revenue in the 48th percentile
•Tx Fees will play a key role in long term miner revenue, which is decaying with expanding network Hashrate
•One PH/s per day running continuously would earn 1.4BTC in 2022, but just 0.8BTC in 2023, per our estimates
•This revenue decline needs to be considered in evaluating miner investment opportunities
•Most 2022 Hashrate is already committed and will come online largely independent of price, so miner economics could overshoot to the downside, particularly since deployments are ahead of our model
