Is China still growing bitcoin mining farm?
The last Cambridge update viewed that China’s share of mining went from 34.3% in June 2021 to 0.0% in July 2021 following a crypto mining ban in the country. Last week’s update showed that China’s share of mining went from 0.0% in August 2021 to 22.3% in September 2021. China grew large number of Bitcoin mining farms in last decade. According to few reports, 90% bitcoin has been mined till now so it is big question- is Bitcoin mining still profitable?
While we are there, we’ll also focus on two other bitcoin mining related topics:
1) hash price and
2) mining company woes
Is bitcoin mining worth it:
Moving to mine operations isn’t exactly easy. The bulk of mining operations isn’t a good thing of people creating problems around. Most miners are more properly differentiated from the commercial operations, by paying the triple net leases for godown space and depending upon the fancy power purchase agreements for electricity.
The reason behind this is that the data looks like this is due to the collection of data method employed by the CCAF. The CCAF has a partnership with bitcoin mining pools to collect geolocational mining facility data based on the IP addresses (pools allow a lot of different miners to contribute to mining, and the reward is then distributed among them according to their processing contribution to figuring out individual miner income
Chinese miners were afraid that the government breakdown was serious, so they lied or changed their location data and moved underground.
That’s not really the whole truth though. The more visible bitcoin mining operators did move at least part of their operations, and the growth of the non-China, mostly U.S.-located mining is well documented properly. To highlight that, the hash rate – the technical power of the Bitcoin network – has grown to 40% since China banned it
Hash price is a term used by Luxor and refers to the expected value of 1 TH/s of hashing power per day. The metric quantifies how much a miner can expect to earn from a particular quantity of hash rate. You can denominate Hashprice in any currency or asset, but we can display the metric in terms of USD or BTC (sats).
– $0.20 per terahash/second per day ($0.20/TH/s/day)
– 475 satoshi per terahash/second per day (475 sats/TH/s/day)
Hash price is a function of three inputs including network difficulty, Bitcoin’s price, and transaction fees. Bitcoin’s hash price will change within every new block added to the blockchain. Luxor’s Bitcoin Hashprice Index involves a 144 lagging SMA to account for the transaction fees.
That’s not really the whole truth although. The more visible bitcoin mining operators did move at least part of their operations, and the growth of non-China, mostly U.S.-located mining is very well documented. To highlight that, the hash rate – the technical power of the Bitcoin network – has grown 40% since China banned it.
Hash price and mining company woes:
Almost falling in bitcoin prices, there is also some problem around bitcoin miners and their profitability ratio. There is a short developed by Luxor Technologies called hash price which shows the expected value of mining. Hash price is expressed as a dollar per terahash per day, a terahash is the technical power provided by the mining equipment.
Hash price has trended down due to:
1) the USD price of bitcoin falling,
2) more miners are coming in online mode and
3) the subsequent increase in network difficulty (the network adjusts how hard it is to mine roughly every two weeks, based on the amount of active mining power).
And the decline is acting as a forcing function for the mining operators to press down or shut down. Many industry practitioners are giving warning that this is the time when “only the strong person will survive.”
In theory, miners close their machines whenever bitcoin prices drop significantly, and it becomes unprofitable to keep them running. This time, even though the hash price has been decreased, we haven’t seen this sort of decrease, and we have the public mining company filings to prove it. Public miners have all publicly taken to something along the lines of, “We are mining the bitcoin, we want to mine more bitcoin, we are going to hold as much of the bitcoin as we mine and as possible and we’re going to use other sources of capital to fund the operations and growth.”
That could be all fine, but as these miners feel more pressure, there are some potential obligations to capital providers they would have to answer to. On top of that, if the market gets worse, these companies may need to do something, like start selling their bitcoin.