Bitcoin Mining May Be Harder Than Ever by the End of 2019 When Numerous Mining Machines are Delivered
Bitcoin hashrate has reached a new record high around 79 quintillion hashes per second (EH/s) on July 29. The rapid rise of hashrate along with the bitcoin price rally has made bitcoin mining more competitive and difficult. It is expected to be much harder at the end of 2019 or Q1-Q2 of 2020 as more latest and powerful mining machines will be ready for shipment in large quantities by then.
Still, more and more money and miners are coming into the crypto mining space. In May this year, the blockchain-focused fund Fundamental Labs has reportedly invested $44.5 million in crypto mining which was just the first phase of the company’s total $150 million in 2019 for further deployment in crypto mining.
Market wants more powerful miners
With abundant and cheap electricity offered during the rainy season in Sichuan, mining for bitcoin is profitable than directly buying a coin. While the most concerned issue of these funds is the payback period. Take Antminer S17 for example, based on the averaged electricity rates of 0.35 yuan per kilowatt-hour, an S17 could mine 0.00147854BTC per day with the power cost at 20.02 yuan. Calculated by the current BTC price, the daily net income of an S17 is around 79.2 yuan ($11.5) with 3% power loss considered. It takes a miner 238 days to pay the invest back given an Antminer S17 is priced at $2,735.
By contrast, the payback days of low-hashrate mining rigs is shorter, with S9 taking 161 days under the same metrics. But they have poor risk resistance, once bitcoin price plunges, they will be the first to be shut down. Although the mining machines delivering high hashrate take longer to pay back, most of them survive from last year’s bear and still generate profits back then with lower power consumption and better performance.
The advantage of high-hashrate miners, and that the cheap electricity secured by Sichuan’s rainy season will soon come to an end in next months, have pushed the market especially institutionalized mining farms in China to phase out those old models and grab for the latest ones. Several miner makers’ websites show most of their latest and powerful mining equipment have been sold out, with some of the popular ones scheduled to deliver this November or December.
Miner makers are producing more
To meet the market demand, bitcoin miner makers have been working hard on increasing their capacity. According to a previous report by 8btc, Bitmain has ordered 30,000 7nm wafers from TSMC, which is likely to be used for bitcoin miners.
Bitmain’s official website shows that its Antminer 17 series (currently out of stock) released this April – S17 (53T), T17 (40T), S17 Pro (56T) – are equipped with 7nm chips. An S17 or S17Pro miner is equipped with 144 chips and the T17 has 90 chips. According to industry analysts, a 12-inch wafer on 7nm process can be roughly cut out 3,000 ASIC mining chips, that means the 30,000 wafers Bitmain ordered from TSMC could output 90 million chips for 625,000 units of 7nm miners, assuming all are Antminer S17 models.
It is expected that these miners will be shipped by the end of 2019 or during the Q1-Q2 of 2020, which is estimated to increase the bitcoin network’s total hashrate by 33 million TH/s, or 33 EH/s (1EH/s quals to 1 million TH/s), in Q1-Q2 of 2020. That would account for over 45% of bitcoin’s total hashrate at the moment (72 EH/s).
Apart from Bitmain, other bitcoin miner makers like Canaan and MicroBT are also increasing the production plan on their latest and powerful miners. An industry insider recently revealed on Weibo that MicroBT, the Whatsminer maker, has racked in 700 million yuan in one week, which could buy 35,904 units of M20S (68T), its most powerful mining machine priced at 19,496 yuan ($2,825). This large quantity of miners would contribute 2.44 EH/s, 3%, to the bitcoin network’s total hashrate.
According to a miner surnamed Yang, Bitmain is producing 40,000-50,000 units of new miners a month, while MicroBT is shipping around 100,000 units per month, more than twice the number of Bitmain. 8btc has reached out to the two companies but both of them refused to make any comment on it.