Hashrate Crash, Poolin's Tokens, and Mining in North America

Published: Tue, 06/29/21

June 29, 2021
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Market Overview

Data as of 12:00 UTC

Here’s the state of bitcoin mining in North America.

Historically, the majority of Bitcoin mining hashrate resided in China. With the invention of the Bitcoin mining ASIC in 2013, strong economies of scale emerged in China, taking advantage of cheap excess energy and robust hardware markets. Indeed, some 65% of hashrate was located in China as of April 2020.
 

Recent regulatory changes have triggered a mass exodus of hashrate from China. Key industry players are now conducting herculean logistical transfers while searching for cheap energy sources and hosting facilities. North America – with strong capital markets, mature energy grids and lean competition – stands as an attractive solution.

Studied and compiled over a six month period, Compass Mining’s NABMI covers the full landscape of North America’s evolving mining landscape, includes insights from dozens of industry insiders, and offers a full analysis of the ongoing shift in bitcoin mining toward both the US and Canada.

Click here to continue reading this section of Mining Memo.
 

Four charts that explain what’s happening to Bitcoin’s hashrate.

Bitcoin’s hashrate has dropped 41% since the beginning of June. Mining difficulty is set for a record-breaking downward adjustment later this week. And the price is sitting in the low $30,000s, down over 50% from its all-time high in April.

What’s going on?

Zooming out, Bitcoin’s hashrate growth trajectory has pretty much been “up and to the right” for its entire lifespan. Dips happen once in a while (e.g., Q4 2018), but they’re rare.

2021 is a bit exceptional though.

Compared to the past few years, the ongoing hashrate drop has solidly deviated from the prior growth trend. Estimates from MiningPoolStats (MPS) show Bitcoin’s total hashrate is between 80-90 EH/s, down from over 150 EH/s on Jan. 1.

Click here to continue reading this section of Mining Memo.
 

Poolin pauses hashrate token payouts as China bans bitcoin mining.

Poolin – a top five mining pool by hashrate – has suspended wBTC and wETH rewards for its tokenized hashrate contracts pBTC35a and pETH18c “for less than 60 days which correspond [to] the estimated schedule of miners migration,” according to a blog post from the pool last Thursday.
 

Predictably, the tokens price rapidly corrected as holders offloaded the contracts.

pETH experienced its highest single daily volume turnover ever at over $2 million.

pBTC, on the other hand, hit a high for June, but failed to outpace days in April and May corresponding to the first coal mining incident that shutdown Bitcoin miners in Xinjiang and the 21% difficulty adjustment, respectively.


Click here to continue reading this section of Mining Memo.

Compass Updates

  • Compass expands its hardware offerings with Antminer Z15s. 

  • Luxor joins Compass as a mining pool partner. 

  • MicroBT inks a purchase agreement with Compass for monthly hardware shipments.

Proof of Work Overview
* measured by $/TH/s

Mining Newsfeed

🧭 Total transactions per Bitcoin block is picking up.  

As hashrate plummetts and miners scramble to relocate their ASICs, the number of transactions included in each block has steadily increased through June. The rate of growth has not been extraordinary, but it does stand out from a mild slump in per-block transaction count from April and May. 

🧭 Here's a map of China's mining crackdown.  

Cryptocurrency is completely dominated by discussion over China's regulatory changes for miners right now. The market is still spooked. Miners are leaving. Hashrate is down. Zooming out, here's a geographic and chronological look at what the crackdown on mining looked like in China.  

🧭 Ethereum's hashrate is down a lot less than Bitcoin's. 

As Bitcoin's has tumbled, other cryptocurrencies haven't been spared. But for Ethereum, its hashrate drop hasn't been nearly as steep as Bitcoin's. One potential explanation for this is that, while Bitcoin's hash power has historically consolidated in China, Ethereum's hashpower has clustered in other geographic regions and thus has less of a shock from the Asian giant's crackdown on mining.

🧭 Fee revenue for bitcoin miners is plummeting.  

Revenue from network fees is an important metric to track as it shows the share of Bitcoin's security budget that is comprised of user fees instead of the mining subsidy, which decreases over time. As hashrate has dropped, the percentage of mining income represented by fees has also dropped precipitously, falling to below 5% to date in June. 

Latest Podcasts
 

Bitcoin Mining Uses Energy Nobody Else Needs with Mike Hamilton of Griid
 

The Golden Age of Bitcoin Mining Profitability is Here with Vincent Vuong of Compass

Quick Bits
  • Canaan begins its own bitcoin mining operation in Kazakhstan. 

  • Sia’s total network storage is up to 1,100 TB from 650 TB in early May. 

  • Bitmain temporarily halted the sale of ASICs after the China crackdown. 

  • Iranian authorities announced their largest seizure of ASICs totalling 7,000. 

  • Blockware announced the sale of their 200,000th ASIC. 

  • Stronghold Digital Mining raised $105 million to repurpose waste coal for bitcoin mining.

About Compass

Compass is a modern media and Bitcoin mining company focused on driving the mass adoption of cryptocurrency. Our research analysts and content creators strive to provide actionable and engaging content on the most relevant industry topics.
 

For more information, to share content ideas, or to discuss mining news, email us at media@compassmining.io.

Written by Zack Voell and Will Foxley. 

   
 

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