Bitcoin third quarter mining report: Under the deep bear of the market, the unit of computing power income and mining machine prices are at a new low

2023-10-24 02:11:50

撰文：Colin Harper、Jaran Mellerud、Balmy Investor，Hashrate Index

Compiled by Frank, Foresight News

Hashrate Index recently released the third quarter 2023 Bitcoin mining report, involving hash price, common network data (hash rate / difficulty / transaction fee), inscriptions, ASIC market, energy market, stock price of listed Bitcoin mining companies and other multi-dimensional data.

The hash price is at an all-time low

Thankfully, the Bitcoin hash price in USD (Foresight News note, a measure of profit earned per day per TH/s) continued to rise in the third quarter of 2023, with Bitcoin reaching a one-year high of just over $30,000 during the quarter, which brought its average price to $28,100 in the third quarter of 2023 ($26,350 in the first three quarters of 2023), thus sufficient to provide support for the dollar-denominated Bitcoin hash price. to prevent it from falling sharply due to the increased difficulty of Bitcoin mining.

HOWEVER, WHILE THE DOLLAR-DENOMINATED BITCOIN HASH PRICE WAS ABOVE $70/PH/DAY IN THE FIRST HALF OF THE THIRD QUARTER, IT FELL BELOW $70/PH/DAY IN AUGUST AND HAS BEEN TRENDING TOWARDS ALL-TIME LOWS EVER SINCE (IN FACT, AT THE TIME OF WRITING, IT'S JUST BELOW $60/PH/DAY AND IS APPROACHING AN ALL-TIME LOW OF $55/PH/DAY).

The Bitcoin hash price in USD in September was $61.71/PH/day, similar to the average price in December 2022 ($61.94/PH/day) and November 2022 ($61.90/PH/day), but the price of Bitcoin at that time only fluctuated between $16,000 and $17,000.

! [Bitcoin Q3 Mining Report: Under the deep bear of the market, unit hashrate income and mining machine prices are at a new low] (https://img-cdn.gateio.im/webp-social/moments-69a80767fe-2af2308c68-dd1a6f-69ad2a.webp)

That said, overall, hash prices in 2023 (at least so far) are a more advantageous year than other years, while this year's monthly and annualized returns are much less volatile compared to other years since 2017.

The price of Bitcoin rose 63% in the first three quarters of 2023, enough to offset the 59% increase in Bitcoin's 7-day average hashrate over the same period,** of course, in addition to the return of the Bitcoin price to rise, changes in Bitcoin transaction fees also supported the hash price. **

Looking at the timeframe included below, 2018 was the worst year for hash prices to date, followed by last year's bear market. The best year was during the unprecedented bull market in 2017, followed by 2020 – which may come as a surprise to some readers, as the third Bitcoin halving cut the block reward from 12.5 BTC per block to 6.25 BTC in the same year.

Annualized data for each year, except for 2023, shows the change to date

Transaction fees remained relatively high, but began to decline

In the third quarter of 2023, transaction fee revenue accounted for 2.7% of all block reward revenue, significantly lower than 8.17% in the second quarter but still higher than the 2.3% in the first quarter.

Despite the decrease in transaction fee income in the second quarter, miners are still making money in the third quarter compared to last year's data, bearing in mind that transaction fee income accounted for only 1.7% of all block reward revenue in Q3 2022, and a lower average of 1.64% in 2022. **So far in 2023, transaction fee revenue has accounted for 4.38% of total block reward revenue. **

As we discussed in our Q2 2023 report, the growth in transaction fee revenue in 2023 stems from a paradigm shift in market dynamics in the Bitcoin block space towards inions/ordinals, the new standard for creating NFTs on Bitcoin.

As the chart below illustrates, the vast majority of these transaction fees were generated during the brief surge in May, and in fact, miners netted 1390.89 BTC (approximately $38.15 million) in May alone, representing 66% of the total historical fees for inscription fees (as of Q3 2023).

This revenue comes from the rapidly growing demand from BRC-20 token collectors and inscriptionists to use the Bitcoin OP_CODE feature to create a series of text-based inscriptions.

The chart below further confirms that the number of inscriptions is falling significantly, with the share of inscriptions in both transaction fees and transactions at its lowest level since the first quarter of this year so far in October.

On average, in the third quarter of 2023, inscriptions accounted for 45% of daily trading volume and 14% of all daily transaction fees; The second-quarter averages were 32% and 16%, respectively, and the first-quarter averages were 3% and 8%, respectively.

ASIC miner prices have repeatedly reached new lows

Bitcoin ASIC miners continued to decline in 2023, with mining models of all specifications hitting record lows in the third quarter as mining profits continued to fall.

As the chart below illustrates, the new generation of ASIC miners (devices with efficiencies of 28-31 J/TH) that we classify as Tier 1 have gradually moved away from the group over the year, with their premium over older and used models increasing since April, and the gap has widened ever since.

As hash prices rose, there was a brief increase in the price of mining rigs at all levels in early 2023, and another brief price increase in the second quarter in response to the improvement in hash price economics driven by the inscription-driven transaction fee revenue.

When we look at the change in listing prices for ASIC miners of different efficiency classes in 2023, we see that the first quarter is particularly different.

Due to the rebound in hash prices, miners of every efficiency class except the next-generation model saw value increase in the first quarter, while next-generation models like the S19 XP appeared somewhat oversold in the first quarter, as the recovery of hash prices made less efficient miners more attractive.

The situation was completely different in Q2 and Q3, with sales of miners accelerating, especially for older and less efficient models, and the table below illustrates the differences between next-generation ASIC miners starting to distinguish between Tier 1 (28-31 J/TH) and Tier 2 (34-38 J/TH).

Antminer S21 model

Bitmain unveiled its latest ASIC miner model, the Antminer S21, at the World Digital Mining Summit in September, which will be available in both air-cooled and water-cooled versions,** and the first ever Bitcoin ASIC miner to operate at sub-20 J/TH efficiency. **

Bitmain could begin shipping S21 models as early as December, although a January shipment date seems more reasonable. Bitmain told Hashrate Index that the company plans to produce at least 50,000 of this model per month within 18 months, with air-cooled and water-cooled models accounting for half, but if there is enough demand, they can produce up to 100,000 of this model per month.

At the World Digital Mining Summit, Bitmain also announced preferential pricing for bulk booking of S21 mining rigs, requiring the purchase of at least 1.2 EH/s (converted to 6000 units for air-cooled models and 3380 units for water-cooled models) for the first phase of pre-orders, while Bitmain sold for $14/TH, which means $2800 per unit for air-cooled models and $4690 per unit for water-cooled models.

The second phase has a predetermined order cost of $19.6/TH ($3920 per air-cooled model and $6566 per water-cooled model) and also requires a minimum order size of 1.2 EH/s.

It should be noted that this is the preferential price when the Antminer S21 model was released, and the price of subsequent orders will be higher than this preferential price. In addition, seller pricing in the secondary market is close to preferential prices, with many suppliers selling models priced between $14-$15/TH.

US electricity prices stabilized

This time last year, many miners operating in the U.S. struggled in a dire market environment characterized by low hash prices and sharp increases in electricity prices. In the third quarter of 2022, the average industrial electricity price in the United States reached an all-time peak of $94 per megawatt-hour (MWh), leading to the bankruptcy of some of the biggest players in the mining space, namely Compute North and Core Scientific.

By October 2023, electricity prices had returned to normal. As the chart above shows, electricity prices in mining centers like Texas, the southeastern US, New York, and the Rust Belt (i.e. Ohio and Pennsylvania) have returned to manageable levels, although there are also some outliers (e.g. Georgia, which had higher electricity costs in July 2023).

The average U.S. industrial electricity price was $86 per megawatt-hour (MWh) in the third quarter of 2023, down 8.5% from the same period last year, and U.S. electricity prices typically peak in the third quarter as demand for air conditioning and other refrigeration equipment is highest in the summer.

Bitcoin hashrate continues to show seasonal variations

Anyone who follows the Bitcoin mining industry may have noticed a new seasonal pattern of Bitcoin hashrate that has been repeating over the past three years.

From October to May, Bitcoin's hashrate tends to grow in an almost uncontrollable manner, but this growth tends to slow down or even fall back over the summer. **The mining sector revalidated this pattern in the third quarter of this year, and this seasonal change is most likely due to the fact that U.S. miners drastically cut mining power deployment over the summer.

In the first five months of this year, Bitcoin's 7-day average hashrate increased by 56%, and then in the three summer months of June, July and August, Bitcoin's hashrate decreased by 1.3%.

A sudden 12% gain in September, combined with a 6% gain so far this month, ended up hitting an all-time high in mid-October.

We are relatively certain that this pattern of seasonal variation is caused by U.S. miners cutting the scale of computing power deployments over the summer, especially in areas such as Texas.

The chart below shows the distribution of electricity prices in West Texas in the third quarter of 2023, and as you can see, most of the hourly electricity prices are above $92 per megawatt-hour, which is also the average revenue of S19j Pro models in the third quarter, so Texas miners typically cut back on hash power deployments during these time periods.

Based on this data, we can imagine that a miner located in West Texas and running a batch of S19j Pro models mining rigs will theoretically have 80% uptime, while electricity prices will exceed the revenue break-even point of their S19j Pro equipment by about 20%, and the miner will average electricity prices of $33 per MWh during normal operation.

Hosting rates in the US and Canada remain relatively stable

Between the second and third quarters of 2023, there was no substantial change in hosting rates in the US and Canada.

According to information obtained in Luxor commercial data and Hashbranch data, the national average level of hosting fees in the United States (for all sizes) was $0.0790/kWh in the third quarter of 2023, compared to $0.0787/kWh in the second quarter of 2023.

The average level of hosting fees in Canada was $0.0725/kWh in Q3 2023, compared to $0.0722/kWh in Q2 2023 (all prices are in USD).

In the US, the average discount for managed large fleets (over 200 ASIC miners) versus small fleets (1-99 ASIC miners) was 8% in Q3 2023, compared to 7.5% in Q2 2023; Large managed agreements were discounted to medium managed agreements (100-200 ASICs) at a 6.6% discount in Q3 2023, compared to 5.3% in Q2 2023.

The stock price of Bitcoin mining companies first rose and then corrected

The stock prices of listed bitcoin miners had a strong start to the third quarter of 2023, riding the ride of bitcoin's rise to $30,000, and their stock prices soared in July, but then fell sharply, erasing all gains in the first month of the third quarter.

Such price movements are also a good reminder that, overall, Bitcoin miners' shares are still highly beta trading relative to the Bitcoin price. **

The market usually evaluates the stock price of Bitcoin miners based on the price fluctuations of Bitcoin itself, rather than based on fundamental factors such as mining efficiency, electricity price/power trading strategy, and operational execution. So when the price of bitcoin rises, the stock price of bitcoin miners rises higher and faster, and vice versa.

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