Introduction:
Luxor Technology’s latest Hashrate Index Q1-2024 Report examines the Bitcoin mining industry after the Fourth Bitcoin Halving. This report offers critical insights into key metrics such as Bitcoin Hashrate, Hashprice, Hashrate Forwards, and Bitcoin Mining Stocks, highlighting the Bitcoin mining industry’s adaptability – and also the challenges that lie ahead for miners in a 3.125 BTC block subsidy world.
Hashrate and Bitcoin Hashprice Fluctuate
Bitcoin miners now focus on hashprice, and the network hashrate.
Hashprice measures how much money miners earn each day by hashing in a mining pool that pays per share. If all else is equal, then we can expect that the Bitcoin block subsidy will be halved, resulting in a doubling of the hashprice.
But it didn’t take place immediately. Hashprice fluctuated wildly in the weeks leading up to and following the Halving. Hashprice dropped to $74/PH/Day in the hour before the Halving, but quickly rose to $183/PH/day when transaction fees from Runes trading spiked. Hashprice plunged quickly to $44/PH/day, a new record. It then stabilized at $50/PH/day. Hashprice had previously reached an all-time high of $55/PH/day in 2022, following the FTX fiasco. The new reality for miners is that hashprice has now fallen to a record low of $50/PH/day.
This leads us to our next point. next Hashrate is a major metric the Halving has affected. Bitcoin’s average 7-day hashrate rose 19% in Q1-20124, to 611 EH/s. It would rise another 6% to a record high of 650EH/s by April. Bitcoin’s Hashrate dropped 10% after the Halving to reach 580 EH/s.
Given that mining margins are compressed and summer is upon us – which will likely necessitate power draw curtailment from industrial-scale mining farms in places like Texas, a headwind for hashrate growth – we should expect Bitcoin’s hashrate to experience only marginal growth this year.
Hashprice Trades in Contango
Hashprice traders believe the market has reached its bottom (at least for now).
Luxor’s Hashrate Forwards are currently trading in Contango. This means that traders of hashrate expect the hashprice in the future to be higher than current spot prices. It is clear that Hashrate Forwards are trading in contango, which means traders expect the price of hashrate to increase over time. This could be due to an increased transaction fee or decreased mining difficulty.
We stated that a temporary shutdown of hashrate in hotspots such as Texas may improve hashprice.
ASIC Markets Are Undergoing Price Discovery
ASICs experienced significant price reductions as Halving approached. Despite a slightly higher Hashprice on average in Q1-2024, the ASIC market was slowing down. It is no surprise that the Antminer S21 has a higher price than the other models. Bitcoin miners have shifted to more efficient equipment to counteract the decrease in revenue post-Halving.
Bitcoin Mining Stocks Are in an Arms Race for Hashrate and Efficiency
All of the major Bitcoin mining companies increased their output throughout 2023. However, certain miner have been more aggressive in their efforts to raise their hashrates during the first months of 2024. It is important for miners, with the block subsidy halved now, to upgrade their ASICs fleets in order to be competitive on the market and to lower operating costs.
Forecasts for the year 2024
If Bitcoin doesn’t experience a major price increase and/or transaction fees spike, then 2024 is going to be a difficult year for Bitcoin miner. More than ever before, the transaction fee will play a crucial role in the bottom line of a bitcoin miner.
To cope with the new norm, those that didn’t in 2023 need to be creative about their operations strategies. In addition to optimizing the power efficiency of their fleets with the newest ASIC models, they should also secure more favorable power contracts. They can use after-market software to optimize ASICs and adopt sophisticated hedging strategy.
We expect consolidation in the US and Canada to be driven by acquisitions, as companies seek out fire sale pricing for ASICs. The mining industry will mature and will integrate more with the energy system. source Electricity production is aimed at achieving the lowest power cost possible.
This is a guest post by Alessandro Cecere & Colin Harper. Their opinions are solely theirs own The views expressed herein do not necessarily represent those of BTC Inc. or Bitcoin Magazine.
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Source: bitcoinmagazine.com