It’s been approximately 37 days since the notorious Bitcoin reward halving that took place on Monday, May 11, 2020. On June 16, the
Bitcoin network saw a large upwards difficulty adjustment making it much
harder to mine bitcoins and slowing down the issuance rate because
block generation has slowed down. Furthermore, a recent research report
predicts the SHA256 ASIC mining industry will grow more consolidated in
the future.
Bitcoin Network Difficulty Jumps to 15.7 Trillion
One
of the most lucrative but also one of the most competitive operations
in the crypto industry is bitcoin mining. Thousands of individuals and
organizations worldwide leverage application-specific integrated circuit
(ASIC) or custom chips to mine bitcoins using the SHA256 consensus
algorithm.
When
more people join in on mining, the overall hashrate rises but every two
weeks, the difficulty adjustment algorithm (DAA) makes it harder to
mine. On the opposite side of the spectrum, if miners capitulate and
leave the Bitcoin network, then the DAA will adjust downward making it
easier to mine bitcoins. On June 16, 2020, the Bitcoin (BTC) network saw a large upward difficulty adjustment to a height of 15.784T at block height 635,040.
This
makes the block generation slow down if even more miners leave the
network before the next difficulty adjustment. At the time of writing,
there are 15 mining pools hashing away at the BTC network and F2pool is still the most dominant pool with 21.3% of the network’s hash rate.
F2pool
is followed by Poolin, Btc.com, Antpool, 58coin, Huobi, Binance, Slush,
Lubian, Viabtc, Okex, Btc.top, Novablock, Spiderpool, and a few unknown
pools. The number of pools since the halving has diminished by at least
40% since the May 11 Bitcoin halving. A report published on June 16, by
Bitmex Research discusses the topic of “ASIC supremacy.”
ASIC Supremacy and Consolidation
The
Bitmex researcher’s findings suggest the mining industry will
consolidate even more so than today. “Further industry consolidation is
likely in both the ASIC manufacturing sector and mining farm operating
sector,” Bitmex Research wrote. The analysts also “ “think it is likely
that only 2 to 3 players will survive into the longer term,” as far as
mining operations are concerned. The researchers also discuss the top
four China-based mining rig manufacturers — Bitmain, Microbt, Canaan,
and Ebang.
“Today
competition is increasing, with strong products from new players like
Microbt gaining traction and eating into Bitmain’s lead,” the report
highlights. “Microbt’s 2019 share is believed to have been around 35%.
However, Bitmain remains the number one player and a force to be
reckoned with.” Based on the Bitmex Research study, the findings note
five predictions which include:
- Competition has tightened
within the ASIC manufacturing industry and Bitmain’s dominance has been
significantly reduced in the last 18 months or so. - The ASIC
manufacturing industry will continue to consolidate. We think it is
likely that only 2 to 3 players will survive into the longer term. - The
mining farm operating industry is also becoming increasingly
consolidated post halving. With new investments coming from an
increasingly small number of well-financed entities. - The
lifespan of ASIC mining machines is likely to extend considerably and
the current generation of products may remain in operation for several
years. - While China is still dominant with respect to ASIC
manufacturing, geographically China is losing share in the mining farm
operator business to Europe and North America.
‘More and More Mining Operations Moving Out of China’
On June 17, Bitcoin (BTC)
network hashrate has jumped to 120 exahash per second despite the
upward difficultly adjustment. The regional reporter from China, Vincent
He, explained
on Wednesday that miners in the region are mining bitcoins as a side
operation rather than a full-scale venture these days. The 8btc
columnist interviewed a small mining farm operator Mr. Huang who said
that mining side ventures are more of a hassle than a “relaxing choice.”
“For
a small miner like me, just invest in to pay the electricity bill, and
wait for the profits, even for large miners in the future,” Mr. Huang
disclosed.
Essentially,
the higher difficulty will hurt smaller operations which makes it so
miners have a thin profit margin and need to sell bitcoins as soon as
they acquire them. Moreover, mining operations are seemingly moving west
and leaving concentrated areas like China. In the report published on
Tuesday, Microbt marketing manager Elsa Zhao, said that shipments are
moving out of the region at an exponential pace.
“[Our] customer
base is moving more and more out of China,” Elsa Zhao stressed. “Since
the halving, the return on investment period is growing, it is now much
longer than six months, based on the current difficulty and price. At
the same time, the average customer size is now growing considerably,
customers are now larger funds, and no longer small businesses or
individuals,” she added.
source link : https://news.bitcoin.com/bitcoin-mining-heats-up-high-difficulty-adjustment-pool-consolidation-less-concentration-in-china/
