The Weekly Hash, 8/16/21: Hashrate Growth Picking Up; S19-Class Hash Spreads Healthy at ~$388 / MWh

Friday’s difficulty reset took the target Hashrate to 111 EH/s, up ~7% over the prior epoch. Observed Hashrate continues to recover, and is currently at 134 EH/s. The rapid recovery can be attributed to Chinese miners finding sites to deploy their rigs and ongoing expansion by other miners. This reinforces upside risk to our Hashrate estimates, though the long lead times on the power infrastructure suggest it should still take ~10 quarters for network Hashrate to converge back to our original forecasts — with better miner economics in the interim.

Bitcoin gained 6.6% week-on-week (WoW), settling at $47,074 as of midnight UTC on 8/15. Price increases have allowed strong margins to sustain.

Total BTC earnings per PH/s are ~8.15 mBTC, down from ~8.76 mBTC / PH/s last week on decreased Transaction (Tx) fees (1mBTC or milliBTC = 1/1000 BTC). Tx fees dropped 17 bps WoW to 0.8% of miner rewards, or 0.05 BTC per block, with low congestion in the “Mempool”.

Bitcoin mining revenue dropped to $384 / PH/s per day and $419/MWh following last week’s difficulty reset, decreasing BTC / PH/s rewards. The network Hashrate appears to be steadily approaching prior highs, but could see stagnation as the slack in plug-in ready sites gets fully absorbed.

The BitOoda North American Hash Spread™ was essentially flat at $387. As noted previously, the network has mostly normalized from recent events, and we expect Hashrate to slowly recover to track our previous estimates. 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 $31.05 / MWh leads to an aggregate spread of $387.

Older-gen S9-class devices saw their Hash Spread™ up ~2% to $87/MWh. S17-class devices, the bulk of the installed base, saw a hash spread of about $275/ MWh.

The current observed Hashrate of >140EH/s implies ~2.2mm operating machines, drawing ~5.3GW power, although the spike in Hashrate observed yesterday may be influenced by luck.

The 112 MWh required to mine 1 BTC with S19-class rigs translates into $3,492 in power expense. It costs $12,413 using S9 rigs, a ~74% margin, excluding labor.

Bitcoin mining is currently profitable well above $100/MWh power price, even with older gen S9 class rigs.

Takeaways

•Observed Hashrate is significantly higher than the target reset on Friday — if this is not a luck-based outlier, target Hashrate could increase by >15–20% at the next difficulty reset

•Miners continue to face infrastructure bottlenecks, which should lead to 2+ years of better mining economics relative to our prior estimates

•Mining economics remain strong right now, but could weaken with network growth

•We assess this presents an opportunity for US-based miners to gain share and acquire capacity and new hosting customers at attractive terms