After continued growth over the past three months, the bitcoin network 's computing power has declined as the summer rainy season in China has come to an end.
According to data from Poolin, the world's largest bitcoin mining pool in real-time hashing rates, seven-day average bitcoin computing power has dropped to about 90 exahashes per second (EH / s) since October 24, which indicates the miners have disconnected from the network. It was previously estimated that the hash rate would exceed the threshold of 100 EH / s by the end of 2019
Due to the power loss, data from the BTC.com Mining Pool Service estimate that bitcoin's difficulty – a measure of the difficulty in competing for mining rewards on the world's first crypto-currency in market value – will decrease by 1.5% once defined. adjust in about seven days.
Bitcoin's mining difficulties reached an all-time high of $ 13.69 billion on October 24, after a 38 percent increase since early August. This increase is mainly due to the increase in miners' chopping capacity made possible by the abundance and lowering of hydroelectricity in the southwestern provinces of China.
Mining difficulty is designed to adjust to increase or decrease every 14 days or so, depending on the respective increase or decrease in hash power on the network during the two-month cycle. weeks. The record high on October 24 followed a jump in the 14-day average hash rate to an all-time high of 97.90 pe.
Poolin co-founder Chris Zhu said in a recent WeChat publication that one of the main reasons for last week's decline was the gradual end of the rainy season in China this year. As a result, some hydroelectric plants in China's Sichuan Province – estimated at 50 percent of Bitcoin's global computing power – are no longer able to generate enough energy to support mining activities.
Miners who do not have sufficient supply of hydroelectric power should shut down or settle in other provinces such as Xinjiang or Inner Mongolio, where mining operations have a more stable, but more expensive, power supply generated by fossil fuel power plants.
Xun Zheng, CEO of Hashage, which has mining facilities in Sichuan Province in southwestern China, echoed Zhu's comments, adding that while some could still find a hydroelectric resource, the cost had gone from $ 0.04 per kilowatt-hour (kWh). in the summer at around $ 0.05.
In addition, the sudden drop in Bitcoin prices on October 23, to less than $ 7,500, could have resulted in a large-scale closure of old but widely used mining models, such as the Bitmain AntMiner S9. The break-even point of S9 is between $ 7,000 and $ 7,500. However, the significant price rebound since last weekend may have put an end to this panic.
Nevertheless, the profitability of the S9 and other similar modes manufactured by the competing miners of Bitmain is a critical problem for their useful life. And that could soon be affected by the higher cost of electricity in winter in China, as well as by halving the bitcoin mining rewards expected for May 2020 – before the rainy season next year.
According to a mine profitability index provided by Poolin and its rival F2pool, at the current Bitcoin price and an electricity cost of 0.05 kWh, the profit margin for mining models like S9 is around 30%.
Some, like INBTC, a sister company to Poolin, are currently working to extend the life of the S9 miner by merging two units to try to generate a higher ratio of hash energy on electricity consumption. This would allow a higher daily profit margin than that obtained with two separate units, although it remains to be seen whether such a method can prove effective and adopted on a large scale.
Image of the mining farm via CoinDesk archives