Introduction:
Luxor technology's latest Q1 2024 Hashrate Index report delves into the performance of the bitcoin mining sector following 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 adaptability of the bitcoin mining industry, as well as the challenges that await miners in a world with 3,125 block subsidies. btc.
bitcoin hash price and hashrate fluctuate
Now that the Fourth Halving has passed, bitcoin miners have their eyes on two metrics in particular: the hash price and the network hashrate.
Hashprice is a measure of how much revenue miners can make per day when hashing with a full pay-per-share mining pool. So, all things being equal, we should expect the halving, which halves the bitcoin block subsidy, to cut the hash price in half.
However, this did not happen immediately. Hashprice experienced extreme volatility in the period leading up to and immediately following the Halving. At the time the halving took place, the hash price fell to $74/PH/day, but quickly rose to a high of $183/PH/day as transaction fees increased due to trading activity of Runes. The Runes hype was short-lived and the hash price soon fell to an all-time low of $44/PH/day before stabilizing at its current level of $50/PH/day. The previous all-time low for hash price, $55/PH/day, occurred in 2022 during the fallout of the FTX debacle, and the new hash price reality underscores the brutal economics miners now face.
Which brings us to the next important metric that Halving has affected: Hashrate. During the first quarter of 2024, bitcoin's 7-day average hashrate rose 19% to 611 EH/s, and would rise another 6% in April to an all-time high of 650 EH/s. With the dust settling after Halving, bitcoin's hashrate has fallen 10% from its all-time high at 580 EH/s.
With mining margins compressed and summer just around the corner (which will likely require a reduction in energy consumption from industrial-scale mining farms in places like Texas, a headwind for hashrate growth) , we should expect the bitcoin hashrate to see only marginal growth this year.
Hashprice is listed on Contango
Notably, traders in the hashrate markets believe that the hash price has bottomed out (at least for now).
Luxor's Hashrate Forwards, a bitcoin mining derivative that allows miners and other participants to buy and sell hashrate at fixed prices at future dates, are traded in contango, meaning hashrate traders expect the price of the hash to be higher in the coming months than the current spot price. . This suggests bullish sentiment among Hashrate Forwards traders, who expect an increase in the hash price potentially due to higher transaction fees or a decrease in mining difficulty.
As we said in the previous section, it is possible that the restriction in mining hotspots like Texas could cause the hashrate to go offline temporarily, thus improving hash price and mining margins.
ASIC markets are experiencing price discovery
The ASIC market saw a significant slowdown as Halving approached, with notable price drops across several models despite a higher average Hash price in Q1 2024. Unsurprisingly, price premiums The Antminer S21 compared to other models increased, indicating a strategic shift among bitcoin miners towards more efficient hardware to mitigate the decline in post-Halving revenue.
bitcoin Mining stocks Are in a Hashrate and Efficiency Arms Race
All major public bitcoin miners increased their hash rates throughout 2023, however, some miners have taken more aggressive steps to increase their hash rates in the first months of 2024. With the block subsidy now reduced to half, it is imperative that miners equip their ASIC fleets with the latest. hardware to remain competitive in the hashrate arms race and reduce its operating costs per unit of hashrate.
Predictions and outlook for 2024 and beyond
Barring a significant rally in the price of bitcoin and/or a rise in transaction fees, 2024 will be a challenging year for bitcoin miners. Now more than ever, transaction fees will play a critical role in a miner's bottom line.
In terms of coping with the new normal, those who didn't in 2023 will need to get creative with their operational strategies. Beyond optimizing their fleet's energy efficiency with the latest ASIC models and securing more favorable power contracts, they can employ aftermarket firmware to optimize their ASICs, adopt more sophisticated hedging strategies, and look for alternative revenue streams or places to reduce costs. operating costs.
In the US and Canada context, we anticipate M&A-driven consolidation as companies take advantage of fire sale prices for ASICs and mining facilities. As the mining sector continues to mature, mining will become even more entrenched and integrated with energy systems, and we believe the current halving era will accelerate this integration as miners are driven towards the source of electricity production to take advantage of the lowest possible energy costs. .
This is a guest post by Alessandro Cecere and Colin Harper. The opinions expressed are entirely my own and do not necessarily reflect those of btc Inc or bitcoin Magazine.
