Bitcoin Mining Revenue Declines due to Greater Target Hashrate, Higher TX Fees, Lower BTC Spot Price: Report

The team at BitOoda, a global digital asset financial technology and services platform offering risk management solutions, “best-execution” brokerage and market analysis, has published their Weekly Hash Report (dated 5/17/2021).

As mentioned in BitOoda‘s report, Bitcoin (BTC) “sold off 21% to $46,023 as of 5/16 midnight UTC.” The leading digital asset dropped “as low as $42,700, following tweets related to Tesla no longer accepting Bitcoin and potentially selling its BTC stake,” the report noted.

Tesla said it was concerned about the Bitcoin network’s excessive energy consumption, transaction speeds, and various other costs. As noted by BitOoda, “to add to the noise, Elon Musk stated Tesla is still holding its BTC.”

As acknowledged by BitOoda:

“None of the arguments is new: Bitcoin is indeed energy intensive, although a growing plurality of its energy usage is both renewable/carbon-neutral and contributes to grid stabilization — which can help operators achieve renewable production goals — or flare mitigation purposes.”

Although certain computing applications may and will eventually achieve similar “positive externalities,” they’re not actually mature enough (technologically) yet, the report added.

It also mentioned that computing apps need high bandwidth and can’t be “easily rerouted as intermittent data centers come online and go offline unpredictably.”

BitOoda pointed out that “stored-energy” solutions for “intermittent generation” are still in their early stages and “ultimately are a cost item, not a revenue item.”

The report also noted:

“Bitcoin is NOT green — but it is getting steadily greener. Hashrate (or the amount of computing power securing the BTC network) has generally been ~10% lower since the last reset on 5/13, tracking around 160EH/s vs. a target of 179.3 EH/s.”

According to BitOoda’s assessment, this could be attributed to the Chinese crypto miners “targeting their annual wet season migration from the northern coal region to the hydro-rich Sichuan/Yunnan regions for after the reset, when lost production of BTC / PH/s is substantially lower than during the last difficulty epoch.”

The report further noted:

“Total BTC earnings per PH/s are ~5.35 mBTC, down from ~6.47 mBTC / PH/s last week. (1mBTC or milliBTC = 1/1000 BTC.) Transaction fees rose 47 bps WoW to 6.1% of miner rewards, or 0.33 BTC per block, with moderate congestion levels in the ‘Mempool.'”

The BitOoda report also mentioned that BTC mining revenue fell to $246 / PH/s per day and $267/MWh because of the greater target Hashrate, “slightly” higher transaction (TX) fees and the lower Bitcoin spot price. The report added that  “correspondingly, the BitOoda North American Hash Spread™ fell 36.2% WoW from $390 to $249.”

As explained by BitOoda, they define the BitOoda Hash Spread™ as “the difference between the cost of power per MWh and the Bitcoin mining revenue per MWh.” According to BitOoda, this gives miners “a quick sense of the surplus generated by their business to cover personnel, overhead, depreciation, and profit.”

Bloomberg data reveals “a weighted average around the clock U.S. wholesale industrial power price of $17.53 / MWh, leading to an aggregate spread of $249 across 5 power markets,” the report noted while adding that older-gen S9-class devices “saw their Hash Spread™ fall 40.5% to $57 / MWh. S17-class devices, the bulk of the installed base, saw a hash spread of about $177 / MWh.”

The report continued:

“The current target Hashrate of ~179 EH/s implies ~173 MWh power consumption per Bitcoin mined using S19 rigs, and substantially more using older-generation equipment. This translates into ~$3,025 in power expense mining with S19-class rigs. It costs $10,756 using S9 rigs, still a 75%+ margin, excluding labor.”

The main takeaways from the BitOoda report are as follows:

  • Recent price volatility is being “driven by old concerns at a time when mining is steadily becoming greener”
  • We believe the recent drop in Hashrate is “driven by an opportunistically delayed wet season migration to the low cost Sichuan region that is now underway”
  • While the “pace of mining rig shipments is picking up, semiconductor / supply chain delays remain a bottleneck”
  • Recent volatility “reinforces our support for hedging tools to mitigate project risk for miners, although mining remains an attractive way to gain Bitcoin exposure.”


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