If Bitcoin’s Price Follows BTC’s Mining Hash Rate, What’s the Significance of Snapping a 19 Month Dry Streak
Bitcoin Miners’ Gross Margins See an Uptake First Time since BTC Price Boom
While the revenues of Bitcoin miners fell to the lowest since August 2017, this month did see a small uptake in the gross margins of miners’ first time since the price of Bitcoin boomed that has been getting squeezed until recently.
Bitcoin Miner Revenues Plummet To 19-Month Low
The latest research of Diar reports that the revenues of Bitcoin miners’ have plummeted to a 19-month low in February. Miners’ saw a decline of 10 percent in revenues from the start of this year as last month they were able to rake in under $195 million only.
In December 2017, the miners earned more than $295 million just from the fee alone. However,
“along with the price drop and the adoption of SegWit rising from an average of 12% in January 2018 to over 43% in February this year, revenues from fees have become an afterthought.”
Currently, the majority of the Bitcoin network is likely to be running on the most recent equipment, notes the report as otherwise, they would be running in a loss while small miners have made an exit from the market.
At the same time, the competition in the market has minimized the gross margin from 94 percent at the beginning of 2018 to just above 32 percent, a year later. However, the gross margins grew to 39 percent in the month of February.
The report further projects that as gross margins see a slight rise, this could lead the mining operators to increase their capital expenditure and invest in the latest mining equipment in order to stay in the lead.
“Bitmain's latest flagship miner that began shipping at the start of the year, the s15, has already sold out twice-over with the next batch set for shipment in April.”
In the meantime, after seeing a reversal in December last year, the hash rate has been able to maintain its growth since then. From here, it is likely that it would continue to rise, projects Diar but only if a massive price drop doesn’t hamper the market.
However, it has also been noted that with Bitcoin halvening just over a year away, the current equipment would no longer be enough to sustain this long term outlook.
“Miners are now raking in a great deal less per unit deployed while trying to keep up with a growing hash rate that has seen a massive increase of over 1700% since the start of 2017.”
In the light of upcoming halving, mining operations have to allot more to their capital expenditure if they want to maintain their share of the upcoming event or the ones with the more efficient equipment will get ahead of them. At the current Bitcoin price, the S15 averaging 84 percent more return than its predecessor that is S9, so capital requirements are to miners’ benefit.