Q3 2021 is in the book, and as it began with China’s bitcoin mining ban, it marked perhaps the most historic change in the bitcoin mining market so far. Since the beginning of the ASIC era, it was the first quarter on record when Chinese miners, typically representing 50% to 60% of the market, were no longer heavyweight competitors on the global playing field.
As a result of China’s sanctions, we are witnessing an unprecedented reshuffle of hash rates around the world (the United States is by far the largest beneficiary), as well as growing interest in the mining industry from newcomers and experienced bitcoins.
The ban has created a unique opportunity, a reset that has leveled the playing field for level investors who never thought it would be possible (or profitable) to enter the industry. Thus, Q3 marked nothing shameful of a renaissance for the bitcoin mining industry.
Luxor Technologies has compiled some data from our data platform from our HashRate Index data platform that measures these changes in our Q3 report. Below are some highlights, and you can find the full report attached at the end of this article.
Hash rate makes quick-expected recovery
Hercules has recovered after the Bitcoin Mining Hash Rate ban; After a half-crack, it increased from 69 seconds per second (EH / s) in late June to 140 EH / s at the end of Q3, recovering 103%.
China’s absence is a lucrative opportunity
From its Q2 low in June to its Q3 high in August, the hash price in U.S. dollars has more than doubled. Hash prices closed at 3 0.29 per thirteenth (TH) in Q3, down 30% from the annual high set in April. For the price of hash in the BTC position, miners increased their profitability by 70% in June and reached its peak in July.
Collectively in Q3, North America’s largest miners mined 79% more bitcoin than in Q2 and 155% more than in Q1.
ASIC price hard hit but recovery
When Bitcoin sank this summer, mining rigs fell with it, which was further exacerbated by the frantic liquefaction following China’s mining ban. In the resale market, some Chinese miners prefer to sit on their rigs and keep them in storage, others liquidate.
For example, new-generation hardware prices fell 48% in the summer, but by the end of Q3 they had recovered 51% from their summer low.
Hash rate blackouts and recovery block times, play with fee revenue
Block times moved to a lazy average of 12.6 minutes in June (China had a .9 19.93 trillion difficulty before the mining crackdown, so while Bitcoin’s hash rate was half-dark overnight, the network was still in this difficulty until July 3, slowly producing blocks). As a result, miners dug only 23,289 BTC in June – 23% less than they earned in May.
As hash rate recovery has begun and mega-farms in North America have booted new machine fleets, we have seen a reversal of this trend in August. With the increase in the hash rate, block production goes into overdrive with an average block time of 8.2 minutes, which netted them 30,683 BTC.
Fees have declined as a percentage of block rewards, with the quarterly average since the event falling from 11.14% for fees as a share of block rewards to 2.06% in Q2.
Forecast for Q4
- The hash rate will close Q4 near its all-time high, somewhere in the ballpark of 185 EH / s
- ASIC prices will surpass all-time highs this spring
- The hash price will exceed its annual high and close at around $ 0.50 / TH per year.
- We’ll continue to see ward upward difficulty adjustments, though not as drastic as all the big positive adjustments we’ve made in Q2 and Q3.
- The transaction income from the fee will be at least doubled.
You can read the full report here.
This is a guest post by Colin Harper. The views expressed do not fully reflect their own and BTC Inc.’s Bitcoin Magazine.