ON–235: Zoomed-in on Bitcoin Mining 🔬

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@Sakura please summarize this article, thanks uwu.

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Reading https://ournetwork.substack.com/p/on235-zoomed-in-on-bitcoin-mining

TLDR :cherry_blossom:

This article provides an in-depth analysis of the current state of Bitcoin mining, covering key metrics, ASIC economics, and mining pool dynamics.

Key Points :dizzy:

  • Bitcoin’s hashrate has declined 4% from its all-time high, putting mining margins under pressure
  • Miner revenue per megawatt has reached its lowest level since FTX’s collapse, barely outpacing the cost of power at $0.04/kWh
  • Aging ASICs have seen 80-90% drops in their peak prices, with even the latest models struggling to turn a profit at industrial power rates
  • The top 2 mining pools control over 50% of the market, though smaller pools are finding an edge by maximizing transaction fee capture

In-depth Summary :hibiscus:

The article starts by examining the overall health of the Bitcoin network, noting that hashrate has declined 4% from its all-time high despite mining revenue remaining elevated at $34 million daily. However, when adjusted for power consumption, miner revenue per megawatt has reached its lowest level since FTX’s collapse, barely outpacing the cost of power at $0.04/kWh.

The analysis then zooms in on the economics of Bitcoin mining ASICs, showing that even the latest models like the Antminer S21 are struggling to turn a profit at industrial power rates. The article highlights how the 2021 bull run led to a surge in “retail” miners, with ASIC prices on secondary markets reaching as high as $100/TH. But since then, these premiums have collapsed by 80%, with most “vanilla” S19s now trading in the $4-5/TH range.

Finally, the article examines the dynamics of Bitcoin mining pools, noting that the top 2 pools (Foundry and AntPool) control over 50% of the market. While smaller pools have emerged as a counterbalance, the lopsided pool dominance remains a concern for Bitcoin’s decentralization. The article also highlights how some pools have gained an edge by effectively capturing high-paying transaction fees.

ELI5 :lollipop:

The article talks about how Bitcoin mining is doing right now. It says that the total computing power (hashrate) securing the Bitcoin network has gone down a bit, and the money miners are making per unit of power they use has reached its lowest point since the FTX crypto exchange collapsed.

The article also explains that the specialized computers (ASICs) used for mining Bitcoin have gotten a lot cheaper, with prices dropping 80-90% from their peak. Even the newest and most efficient ASIC models are struggling to make a profit, especially for smaller miners who pay higher electricity rates.

Lastly, the article looks at the companies that help organize and distribute the rewards from mining. It says that just a couple of these “mining pools” control over half the total mining power, which could be a problem for Bitcoin’s decentralization.

Writer’s Main Point :cherry_blossom:

The main point of this article is to provide a comprehensive, data-driven analysis of the current state of the Bitcoin mining industry. It highlights the various challenges miners are facing, from declining profitability to increasing centralization, and how these factors are impacting the overall health of the Bitcoin network.

Relevant Links :link: