Bitcoin’s Hash Rate Grew More Than 80% Since June — Mostly Within China

… plus five other key takeaways from the December 2019 CoinShares mining report.

By   Christopher Bendiksen 12th December 2019

Our latest mining report is out, and per usual we’ve summarised the key takeaways below for those pressed for time. The full report — which we do recommend reading — is available now.

If you’re just now arriving to the mining discussion, we skipped the introductory treatments of mining and Proof-of-Work on a conceptual level and refer readers to previous posts here and here.

Highlights from the December 2019 mining report:

  1. Since our last report in June 2019, the Bitcoin hash rate grew more than 80% from approximately 50 Exahash per second (EH/s) to over 90 EH/s at the time of publication. We believe this is a combined result of strong profitability over the reporting period and large-scale availability of next-generation mining gear.
  2. Of the ~40 EH/s added to the network, we believe 70% has been installed in China and 30% outside of China. Thus our current estimate for Chinese share of total hash power now stands at two-thirds of the Bitcoin network (65%). Though we expect this to even out as next-generation gear fully disseminates across non-Chinese mining regions, it’s nevertheless the highest percentage we’ve measured since we first started publishing our mining reports in 2018.
  3. Estimated market-average all-in ROI (breakeven) costs ~$6,100
  4. Estimated market-average cashflow breakeven levels (or market-average ‘miner capitulation’ prices) ~$3,900 (…difference between these two estimates is explained here.)
  5. Hardware efficiency increases by an order of magnitude (10x) roughly every four years, still continuing in line with its five-year trend. However, we’re seeing beginning signs of this trend starting to slow down.
  6. Our new estimate for industry-wide renewables penetration is 73% (down from 74.1% in the last report). This reflects increased mining activity in fossil fuel dominated regions such as Iran and Kazakhstan, moderated by increased hash power in Sichuan.

Additional notes:

  • Both market-average breakeven figures assume ¢4/kWh electricity costs; 15% additional Cooling & Other OPEX; and 30-month depreciation schedules. Since our last report, we increased the average depreciation schedule from 18 to 30 months in line with increasing hardware lifespans, and decreased our average electricity cost to ¢4/ kWh to reflect increased average access to competitive electricity prices.
  • The cashflow breakeven estimate currently sits as an average split between a large gap in efficiency between last-generation and next-generation gear currently deployed. There are still probably more than 1,700,000 Antminer S9s in operation in the network, and these machines would, at ¢4/kWh, ‘capitulate’ at prices closer to $5,500. Conversely, next-generation gear would likely not capitulate, at ¢4/kWh, until prices fall below $2,500.
  • It was more difficult than usual estimating the location of network hash power — especially the newly added gear. Of all new hardware added, we believe 70% went to China. We also assume that, among the 70% of new hash rate we believe went to China, its distribution within China remains the same as before.
  • Location data mainly reflects wet-season conditions and some Chinese miners might recently have migrated from the hydro-dominated regions of the south-west to the coal-dominated regions of the north and north-west (although we have not seen any proof of such migrations this year).


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