Observation: Bitcoin computing power and mining difficulty hit a record high in 2019, but miners have experienced the most difficult year in 5 years

Bitcoin miners launched a shocking competition in 2019, bringing the network's computing power and difficulty to a record high. However, it turns out that the mining pool has suffered severe losses for a considerable period of time.


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Falling prices have not stopped Bitcoin miners

Due to unfavorable market prices, most large mining companies are mining at a loss this year. However, this did not lead to the surrender of miners as previously expected. Instead, miners have redoubled their efforts to continue to enjoy the final 12.5 BTC block rewards before halving next year.

Looking back on 2019, there are two periods in which miners continue to compete for block rewards despite the price falling below the break-even point of mining.

Bitcoin miner was injured.

In the past 5 years, the past 12 months have been the lowest profit period for Bitcoin miners.

Blood flowed into the river.

… stay tuned

— Charles Edwards (@caprioleio) December 12, 2019 The last few months of the year are also one of the periods when mining occurs below the break-even point. However, past miners have also achieved high potential returns, and some miners may decide to keep such coins. Due to the lack of history, newly produced bitcoins also have their own value. However, halving the reward may also cause miners to limit their activities because they cannot even accumulate BTC.

In 2019, miners will also have access to the futures market, which may offset some of the losses on the spot or over-the-counter market. Now, with the introduction of futures options, some Bitcoin miners may try to hedge this risk.

Break-even prices are difficult to estimate

The hashrate of the Bitcoin network has been fluctuating, and recently dropped from 101 quintillion hashes per second to 88 quintillion hashes per second a day ago. The biggest contributor remains China's largest mining pool.

At this point, some older mines investing in S9 ASIC series miners may still be viable and actually have a more favorable ratio between the cost of fees and the market price of Bitcoin.

There is no consensus on the break-even price of mining, but current loss estimates assume a break-even price between $ 7,000 and $ 8,000. However, with lower electricity prices, miners have the ability to produce BTC at a lower cost price. The cost of electricity per US $ 0.05 per kWh is much lower. A rough estimate is that the break-even point for Bitcoin mining in China's hydropower plants is $ 3,500.

Historical prices indicate that, regardless of the length of time, the price of Bitcoin is also close to its mining breakeven point:

for reference only. $ 6,000 is the current full-load breakeven cost of Bitcoin mining (if the miner's electricity bill is $ 0.06 / kWh). In 2014/2015, BTC's full-load break-even point cost was $ 190-200, and BTC's lowest point was $ 180 or 1x the cost of mining. ——— Thomas Lee (@fundstrat) September 14, 2018