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Bitcoin’s Hashrate Distribution Surges: Public Miners Claim 27% Share In Q3-2023

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Bitcoin’s hashrate distribution has seen significant shifts over the past year, with public miners now accounting for 27% of the Bitcoin network’s hashrate. It marks a substantial increase from January 2022, when public miners held only 17% of the network’s mining power. HashRate Index, a prominent authority on cryptocurrency mining data, suggests that this trend is set to continue as well-capitalized public miners acquire the assets of distressed private miners post-halving.

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Source: HashRate Inde­x

HashRate Inde­x recently rele­ased its Q3-2023 Bitcoin Mining Report, highlighting significant industry changes and tre­nds. The report acknowledge­s the positive impact of Bitcoin’s 2023 price rally, as BTC re­ached a yearly high of just over $30,000 during Q3. Notably, the­ average price throughout this quarte­r was $28,100, providing support to the USD-denominated hashprice­ despite an increase­ in Bitcoin’s mining difficulty.

The hashprice­ experience declined in August, dropping below $70/PH/day. Curre­ntly, it is hovering close to its all-time low of $55/PH/day and stands just below $60/PH/day. As a result, Septembe­r’s average USD hashprice is re­corded at $61.71/PH/day. This figure reminds us of the­ averages from Dece­mber and November 2022 whe­n BTC’s price fluctuated betwe­en $16,000 and $17,000

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Source: HashRate Inde­x

In 2023, the stability of hashprice­ has shown improvement compared to pre­vious years. During the first three­ quarters, there was a 63% re­covery rate, effe­ctively countering BTC’s 7-day average­ hashrate growth of 59% in that same period. This stability has be­en influenced by transaction fe­es, which witnessed a notable­ increase to 4.38% of block rewards in Q3-2023. This rise can be attributed to the e­mergence of a ne­w standard for non-fungible tokens (NFTs) on Bitcoin.

Seasonal Patterns In Bitcoin’s Hashrate

The re­port highlights a seasonal pattern in Bitcoin’s hashrate. It indicates growth from October to May and a slowdown during summer. This trend aligns with U.S.-based miners reducing ope­rations, particularly in Texas. This year, the 7-day average hashrate increased by 56% in the first five months but declined by 1.3% in June, July, and August. A sudden 12% rise in September pushed the hashrate to an all-time high in mid-October, attributed to this seasonal pattern.

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Source: HashRate Inde­x

The analysis indicates a connection betwee­n the reduction in U.S. miners and the­ higher power prices obse­rved during summer hours. In Q3-2023, both the Unite­d States and Canada experienced minimal changes in their national ave­rage hosting rates. For instance, the­ U.S. average hosting rate was $0.0790/kWh in Q3-2023, slightly highe­r compared to $0.0787/kWh in Q2-2023.

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Source: HashRate Inde­x

The re­port also discusses the performance­ of Bitcoin mining stocks during Q3-2023. At the beginning of the quarte­r, these stocks showed a strong start in line­ with Bitcoin’s price surge to $30,000. Howeve­r, they exhibited significant volatility throughout the­ entire quarter, highlighting the­ir correlation with Bitcoin’s price moveme­nts.

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Bitcoin’s Hashrate Soars: Miners Reclaim Power Amidst Texas Turmoil

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Bitcoin’s network hashrate has skyrocketed to unprecedented levels as miners regain their full operational capacity. According to the latest report from Hashrate Index, the average hashrate reached a staggering 401 EH/s over 7 days, while the 3-day average surged even further to an incredible 445 EH/s. 

Global Miners Fuel Explosive Growth In Bitcoin Hashrate

This resurgence in hashrate follows a recent period of curtailment caused by extreme weather conditions in Texas, the renowned bitcoin mining capital of the United States.

Previously, the heatwaves that swept through Texas failed to cause significant disruptions to the local power grid. As a result, miners are now back with a vengeance, fueling an explosive growth in hashrate. 

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Source: Hashrate Index

The 7-day average has witnessed an 8.5% increase to 398 EH/s, while the 3-day average experienced an astonishing 18% surge to 444 EH/s, most of which occurred over the weekend.

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Source: Hashrate Index

Although Texas miners play a significant role in this hashrate surge, it’s essential to note that miners from various parts of the world are also expanding their mining capacity. This collective growth in hashrate sets the stage for a substantial difficulty adjustment in the near future.

The forecast indicates that the upcoming difficulty adjustment will likely surpass 7.5%, implying potential challenges for miners. If Bitcoin’s price fails to rise significantly in the coming week, miners may face hash price levels below $70/PH/day when the adjustment occurs. This decline in hash price is not primarily a response to Bitcoin’s price but rather a result of decreased transaction fees.

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Source: Hashrate Index

Bitcoin transaction fees, which witnessed a surge during the BRC-20 mania in May, are now normalizing and have reached their lowest levels in months. Consequently, the hash price is falling even before the positive adjustment, signaling a recession in transaction fees.

Meanwhile, in the realm of Bitcoin mining stocks, a remarkable upward trend is observed. Except for two stocks, all Crypto Mining Stock Index stocks experienced double-digit percentage gains over the past week. The index itself rose by 10%, marking a significant leap.

Nevertheless, the mining industry braces for a forthcoming difficulty adjustment as the Bitcoin hashrate surges to unprecedented levels.

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Bitcoin Mining In Canada: Hashrate Market Share Slumps From 13% To 7% in Just One Year

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Despite initial growth and expansion in the Bitcoin mining industry, companies faced economic and political challenges resulting in a lackluster year-end performance. 

Specifically, Canada’s market share in the global network hash rate reached a peak of 13% in 2021 but saw a decline to 7-8% by the end of 2022, according to the blog post from January 12th from Hashrate Index.

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Source: Hashrate Index

The digital asset market saw a surge in defaults and bankruptcies, with FTX experiencing the most significant collapse. This was due to a combination of increasing borrowing costs and decreasing asset values, causing the price of Bitcoin to drop by 65%. 

The digital asset mining industry faced further challenges as network difficulty increased by nearly 46%, primarily due to investments made in ASICs and infrastructure during more favorable economic conditions in the past. 

As a result, the price miners receive for their digital commodity, hashrate, saw a drastic decrease of 76%. Additionally, miner profits were further impacted by the rising energy costs in Canada and globally, putting additional pressure on their margins.

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Source: Hashrate Index

Regulatory Headwinds Rising for Bitcoin Miners in Canada

The blog post highlighted that in February, Canadian Bitcoin Miners were Blindsided by the Proposed Amendment to the Excise Tax Act, which would classify mining as non-commercial, resulting in a hidden tax hike of 5-15%.

Additionally, Canadian miners formed the Fair Tax Treatment for Responsible Digital Asset Mining Coalition and successfully paused the proposed changes, but the proposed tax change still looms over all potential new investments in the country. 

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Source: Hashrate Index

Policy challenges were not limited to the federal government, with Ontario Energy proposing to exclude cryptocurrency miners from participating in the Industrial Conservation Initiative (ICI) and other provinces removing electricity allocations for new mining operations, citing energy-use concerns.

Additionally, in March, Ontario proposed banning cryptocurrency miners from a conservation program that reduces electricity costs, according to the blog post.

Other Canadian provinces have also restricted new mining operations due to energy concerns, despite the flexibility of Bitcoin mining and its high electricity production per capita.

As per the blog post:

We believe the government’s misguided approach to Bitcoin mining is the main driver behind the decline in Canada’s hash rate market share in 2022.

According to the blog post, the digital asset mining industry in Canada is facing challenges but has the potential for growth in 2023. The blog post calls for a permanent and coordinated lobbying effort across Canada to signal to governments that the industry is here to stay and to address current and future issues.

The industry also needs to better highlight how it contributes to society by creating jobs, bringing investment to local communities, and improving energy efficiency and sustainability.

The post concludes that the industry’s ability to change the narrative and educate policymakers on the benefits of responsible digital asset mining will be key to its success in 2023 and beyond.

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Get Ready For Bitcoin Bull Market – Hashrate Index Predicts End of Bear Market in 2023

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WU Blockchain reported yesterday that the professional mining data organization Hashrate Index has predicted that the current bear market for Bitcoin will come to an end in 2023. 

It is currently too early for another full-scale bull market to occur. The report also states that the growth of Bitcoin’s hashrate will slow down and that ASICs (application-specific integrated circuits) will become very inexpensive.

Bitcoin Mining Predictions For 2023

Yesterday, Hashrate Index published a blog post with ten predictions for Bitcoin mining in 2023. The first prediction noted that the price of BTC is the most important factor influencing the mining industry. The post pointed out that Bitcoin has experienced similar bull and bear cycles in the past.

The drop in price from the highest point to the current low is 78%, which is similar to the maximum drawdowns of 85% and 84% experienced in 2015 and 2018. Based on historical patterns, it seems that this bear market may be nearing its end.

The second prediction in the list suggests that the growth of the hashrate, which is a measure of the computing power being used to mine Bitcoin, is expected to slow down in 2023. This is due to the poor economic conditions for mining in 2022, which did not provide incentives for increasing capacity. 

However, the hashrate increase expected in 2023 will largely consist of capacity expansion that was originally planned for 2022 but was delayed.

The third prediction in the blog post states that following the prolonged bear market, some public Bitcoin mining companies, whose market capitalizations have fallen below $50 million, may choose to go private in order to significantly reduce administrative costs. 

Alternatively, some public mining companies may merge with other companies in order to share administrative costs and benefit from economies of scale.

The fourth prediction is that hosting prices for Bitcoin mining will decrease as more infrastructure becomes available and miners who are no longer profitable leave the industry. 

With the poor economic conditions for mining and increased competition, hosting providers will need to lower their prices to remain competitive in 2023.

5–10 Bitcoin Mining Predictions 

The blog post further states that the ongoing bear market will require miners to be more efficient in their use of electricity. As electricity is the most significant long-term cost for miners, reducing administrative costs is the most effective way for them to lower costs in the short term.

In addition, it is predicted that prices for ASICs (specialized hardware used for Bitcoin mining) will become very low, although newer and more advanced machines will still command a higher price. 

Although ASIC prices are currently lower than they were at the peak in 2021 or even at the start of 2022, they are expected to decrease further in 2023 unless the price of Bitcoin increases significantly.

Moreover, the blog post predicts that many miners will struggle to maintain a sufficient amount of uptime or the amount of time that their mining operations are active due to high electricity prices. Additionally, some regulators in specific regions may continue to focus on the Bitcoin mining industry.

In 2023, it is expected that miners will focus on improving their financial stability and will make greater use of Bitcoin mining derivatives, financial instruments that allow them to manage the risk associated with volatile revenues from mining operations.

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Bitcoin ASIC Miners Prices Per Terahash Hit All Time Low Of 80%

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In what is being perceived as another indicator of a deepening crypto bear market, Bitcoin ASIC miners, devices designed solely for mining Bitcoin, are currently selling at bottom-of-the-barrel prices last seen in 2020 and 2021.

The most effective ASIC miners, those that produce at least one terahash for every 38 joules of energy, have seen their prices drop 86.82% from a peak of $119.25 per terahash on May 7, 2021 down to $15.71 as of December 27, according to latest data from Hashrate Index.

The Antminer S19 from Bitmain and the Whatsminer M30s from MicroBTC are examples of miners in this category.

The same is true for mid-range computers, whose average price has dropped significantly 89.36% from its peak price of $96.24 on May 7, 2021, to currently average $10.23.

The least effective machines, on the other hand, are now priced at $4.72, a 91% decrease from their peak of $52.85. These devices demand more than 68 Joules per terahash. It was last priced similarly on or about November 5, 2020.

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Source

Large Bitcoin mining firms that have battled to remain profitable throughout the bear market are mostly to blame for the price decline. To keep afloat, many of these firms have either filed for Chapter 11 bankruptcy, taken on debt, or sold their BTC holdings and equipment.

Core Scientific, Marathon Digital, Riot Blockchain, Bitfarms, and Argo Blockchain are a few of the companies that have completed that.

However, some eager purchasers have responded to the sharp price decline. Numerous Russian-based mining operations, like BitRiver, are among them. With some modern hardware, they can mine 1 BTC in the energy-rich country for approximately $0.07 per kilowatt-hour, taking advantage of the relatively low electricity costs in the country.

Bitcoin’s 2024 Halving Cycle To Be Different

Although it’s difficult to predict which price direction ASIC miners will take next, Nico Smid of Digital Mining Solutions noted in a tweet on December 21 that ASIC miner prices bottomed at Bitcoin’s most recent halving cycle on May 11, 2020 and quickly moved up afterward — something that could play out in Bitcoin’s upcoming halving cycle, which is anticipated to occur on April 20, 2024.

Bitcoin Mining Companies Owe Over $4B, Core Scientific Owing the Most: Report

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An analysis of public Bitcoin mining companies by the Hashrate Index revealed that they owe more than $4 billion. The largest of them has already filed for bankruptcy due to its unmanageable debt load.

On December 23rd, the Bitcoin mining analyst published a research report detailing the debt burdens of public miners and outlining who owes the most money.

Publicly-traded mining companies that once benefited from high profits and strong cash flow have now been doomed by their missteps. Their debts have increased tenfold as they struggle to stay afloat – instead of paying down debt, they are forced to restructure. 

These restructurings typically turn debt into almost worthless equity, meaning both equity and debt holders suffer massive losses.

The report also asserts that there will probably be additional restructurings and maybe even bankruptcies in the future because the sector has unsustainably high debt levels. However, “some public miners barely have any debt.”

Bitcoin Miner Core Scientific In Led With $1.3B

As expected, the report discloses that Core Scientific, the largest publicly traded bitcoin miner by hashrate, has the highest debt, with $1.3 billion in liabilities listed on its financial sheet as of September 30th.

Such a heavy debt burden leaves little else for the company to spend its money on besides paying off its monthly creditors. Without being able to do so, it was forced to declare bankruptcy after having accumulated such large amounts of debt all at once.

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Source: Hashrate Index

Marathon, with $851 million in obligations, is the second-largest creditor. Greenidge is the third-biggest debtor with $218 million but is in a restructuring procedure that might significantly lower its debt.

According to the report, debt-to-equity ratios of two or more are seen as dangerous in most sectors, but in the infamously unstable bitcoin mining industry, it should ideally be far lower.

The highest debt-to-equity ratio among publicly traded miners is Core Scientific’s 26.7, which is hardly surprising given its huge liabilities.

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Source: Hashrate Index

Nevertheless, a significantly high debt-to-equity ratio of 1.8, compared to most other industries, is achieved by the whole bitcoin mining industry, which has total liabilities of $4 billion and equity of $2.2 billion.

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