The complexity of Bitcoin mining has updated the historical maximum
The ban on mining in China in May last year caused a real stir in the ASIC market, since a decrease in network power leads to a drop in the complexity of calculations and an increase in profitability. This was taken advantage of by Western companies that concluded the largest orders for the supply of equipment. For example, Marathon Digital (NASDAQ:MARA) took out a $100 million loan in October 2021 to order a batch of the latest S19 XP with a capacity of 140 Th/s and plans to become the most powerful public miner in the world in a year.
The increase in computing power led first to a record increase in the hashrate of the network, and then to the complexity of the calculation. These two indicators are inextricably linked, since the system strives to maintain the speed of block creation once every 10 minutes. On January 21, the complexity of Bitcoin mining jumped by 9.3% at once.
Despite the increasing complexity, the yield per hashrate is twice the historical minimum.
This is due to both the relatively high cost of Bitcoin and the improvement of equipment. For example, the above-voiced asic S19 XP provides an estimated income of $18.5 with an electricity cost of $0.1 per 1 kWh.
The current cost of Bitcoin mining is estimated at $34 thousand, so the correction of the coin to $ 38 thousand is not a big nuisance for miners with the latest equipment. However, it forces an increasing number of market participants to switch to accumulation in anticipation of price increases.
A reduction in supply due to the accumulation of coins, as a rule, leads to an increase in price. However, the cryptocurrency market (like any other financial market) can experience a state of euphoria or panic. A potential ban on operations with cryptocurrencies and mining in Russia, which is the third player in the world in terms of contribution to the Bitcoin hashrate, can cause a sale of coins. In this case, we will see a repeat of the “Chinese scenario” of last year with a drop in network power and the continuation of the Bitcoin correction.