Bitcoin (BTC) mining continues to increase after the successful halving of May 11, but a growing industry concentration could undermine the “democratization of hashrate,” said a panel presentation at this year’s Mining and Investment Summit.
Hosted by Matrixport and sponsored by Bitmain, was the summit on mining and investment in 2020 kept virtually Tuesday morning, bringing together the “ leading cryptocurrency mining and financial services companies for digital assets. ”
In a presentation called “Bringing Bitcoin Mining to a Broader Market,” Thomas Heller of HASHR8 gave an update on the mining industry, including trends in ASIC demand.
Heller indicated that the market is currently experiencing an “ASIC supply shortage”, with a “large pool of enthusiastic miners looking to buy”. He indicated that hardware vendors Bitmain, MicroBT and Canaan are already taking orders for March to July 2021.
Commenting on the so-called Bitcoin supply crisis, Heller’s presentation stated:
North American public and private companies continue to collect bitcoin and expand their bitcoin mining activities. This led to a supply crisis for BTC itself. “
A rush to collect Bitcoin by institutions and companies contributed to an increase in mining revenues, which in turn has led to a surge in demand for new and second-hand ASIC miners. Major miners are ramping up their operations amid the scarcity of Bitcoin supply and want to bring as much hashrate within their borders as possible.
These trends could move the industry’s hashrate further away from democratization as China continues to dominate. As Heller points out, two-thirds of Bitcoin’s stock price is concentrated in China-based mining companies.
It is generally believed that China is one of the lowest breakeven rates for miners in the world. As of June, it took between $ 5,000 and $ 6,000 to mine one Bitcoin in China, assuming $ 0.04 / kWh. Globally, the Bitcoin mining breakeven rate can reach as high as $ 8,500 in some jurisdictions.
Bitcoin mining is generally considered less accessible to individual miners due to the costs and resources involved. Over the years, the mining industry has been dominated by weighted pools, or groups of cryptocurrency miners who combine their computing power. While pool distribution is not as concentrated as before, three pools accounted for 45.3% of the hashrate in the last 12 months.
Location and individual ownership of hashrate are important considerations when thinking about decentralization, Heller said Tuesday.
HASHR8 recently announced the launch of Compass, a platform that links Bitcoin miners with verified hosting facilities. The goal of Compass is to democratize mining profitability and involve more small-scale miners.