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Noti Hash: Low Profitability Does Not Prevent Bitcoin Mining Growth

Noti Hash is the newsletter of n news about Bitcoin mining from CriptoNoticias. It is published on our website every two weeks, being today, Thursday, September 23, 2021, the fourth edition to be published, at the height of block 701.888.

Bitcoin has grown non-stop since it came online in 2009, from an investment in energy and a practically incalculable amount of work by miners.

Since we started to publish this newsletter, which is now in its fourth edition, the growth of Bitcoin mining has been palpable , after some months of inconvenience caused by the bans from China.

Now, the Bitcoin blockchain reached 700,000 mined blocks, accompanied by the consecutive increase in the difficulty of mining and the hash rate, which estimates the capacity processing of miners.

The constant acquisitions, business alliances and the persistence of the miners in their operating model, suggest that despite having low profitability ility, the best times may be yet to come for Bitcoin mining .

Hash rate and difficulty do not decline

According to data from YCharts, the Bitcoin hash rate currently stands at 113.93 terahashes per second (TH / s), which has not been the highest point since last July. However, support is established against other high points that have occurred during the month of September.

The highest hash rate reached this month took place on September 14, with 153 , 7 TH / s, while on September 20 it reached 150 TH / s.

Hash rate of Bitcoin miners from October 2020 to September 2021. Source: YCharts.

For its part, the difficulty of mining, which is the mechanism by which Bitcoin ensures that the frequency of issuance of blocks is not too fast, increased for the fifth consecutive time the last September 21, standing at 18 T.

Although the difficulty still does not completely exceed the levels of July 2021; even less the levels of June and May (when it reached its historical maximum), the rate at which it has increased suggests that more computers are connecting to the network.

Bitcoin’s difficulty stands at 18 T, increasing for the fourth time in a row in the last three months. Source: YCharts.

In the table below, we can see the last 5 difficulty settings. This indicates the block height at which they were made effective, the date and time, the estimate of the difficulty, the percentage variation, and how much hash the miners contributed for that moment, starting with the most recent adjustment in the upper box (21 September) and the oldest in the latest (July 30).

Last 5 difficulty settings of the Bitcoin network. Source: BTC.com.

Low profitability of miners stabilizes the price of Bitcoin

In our previous Noti Hash we reported that the low profitability of the miners, in terms of the effort invested and the rewards obtained, did not they have slowed the growth of the industry. The decrease in profitability in the last 7 days may be related to the retracement of the price of BTC.

Profitability of Bitcoin miners for every terahash of work invested daily in confirming transactions. Source: HashrateIndex.

However, one of the indicators that seems to be more accurate regarding the performance of miners and the price of bitcoin (BTC) is the Puell multiple.

According to this indicator, created by analyst David Puell, the BTC market cycles may be related to the price at which miners get BTC , and the price they sell at when they need to refinance their operations (electricity payments, payroll, repairs, acquisitions, etc.).

“The Puell multiple is calculated by dividing the current value in dollars (USD) of the daily issuance of BTC, with the annual average of the price of the daily issuance of BTC in USD,” reads the LookIntoBitcoin portal, which shows this indicator.

According to this same website, an investor could use this index to discover the periods of higher or lower profitability of their investment in BTC, interpreting the red band, where the Puell multiple is close to 10, as an area where it is more successful to sell (liquidate the position) and the green band, where the Puell multiple is less than 1, a buy area.

In red, the Puell index. In blue, the price of BTC. Source: LookIntoBitcoin.

Judging by the low fees and little congestion that the Bitcoin network has enjoyed since July 2021, miners would now be in an accumulation stage, waiting for the price to increase.

Rates and congestion of the Bitcoin network from April 2021 to September 2021. Source: Mempool.Space.

Also, they could be tar backed by the frequent rounds of financing and long-term deals that they have agreed to in recent months, which in some way can guarantee their financial future and prevent them from having to compulsively sell the 6.25 BTC they obtain per block, plus fees.

As long as the Puell multiple remains in the intermediate zone, it is possible that the price of BTC will also have a stable behavior, or reduce its volatility. However, in addition to financing, miners now also have the possibility of requesting loans backed with bitcoin, with which the sales pressure to maintain their operations is no longer as high as in the past. However, the Puell multiple is still a useful indicator to determine when is the most favorable time to sell.

This does not constitute investment advice from CriptoNoticias, where you always We will invite you to do your own research and make the decisions that you consider best.

An opportunity to boost the global hash rate

It is possible that the hash increase rate and the difficulty has been decelerated by the tightening of mining bans in Iran, where authorities have been closing farms, we reported in CriptoNoticias.

However, this is difficult to verify Because the activity has been prohibited in recent months in that country, which has not received as much migration of miners from China as it has. has made the US, Kazakhstan and others.

While Iran has not yet lifted the bans, despite the fact that it would presumably allow mining again since yesterday, September 22, other countries have opened up to Bitcoin mining , or at least, will give up their persecution.

These are the cases of Paraguay and Venezuela, in South America, and Laos, in Southeast Asia. Paraguay, reported CriptoNoticias, will receive more than 3,000 mining equipment from the Bitfarms company , which is preparing to install mining farms powered by hydroelectric energy in said country.

For its part, it was known that in Venezuela would penalize security agents with jail to detain Bitcoin and cryptocurrency miners unjustifiably.

The country has a history of extortion cases, raids and interventions by the police forces against the miners, which gave rise to a regulatory system that deals with these types of cases of abuse of power, but which still has to remind its agents to not violate the law. law and due process .

Regarding Laos , the authorities of this Asian country announced last week that they would allow the trading or commercialization of Bitcoin and other cryptocurrencies, as well as their mining.

This country also has important water currents and sources of hydroelectric energy that will facilitate the mining of cryptocurrencies in an ecological way, reported CriptoNoticias.

Mining pools in tough competition

Regarding mining pools, which bring together the processing power of all individual miners in different operating groups around the world, there have been important changes in their ranking or positioning since our last Noti Hash

According to BTC.com, two major movements occurred in the position of the mining pools. Specifically, the F2Pool rose from fourth to second in processing power, with 23,376 petahashes per second (PH / s). Also, the BTC.com pool rose from seventh to sixth place , displacing the Foundry USA pool.

top-10-pools-mineria-bitcoin-segun-tasa-hash top-10-pools-mineria-bitcoin-segun-tasa-hash
Top 10 Bitcoin mining pools based on their capacity or hash rate. Source: BTC.com

Bitcoin mining is also driven by stock markets

No few Bitcoin mining companies are listed on the US stock exchange. Knowing their stock market performance allows us to find indicators about their current state and their evolution in the markets.

In view of the fact that these companies make large investments in farms, pools, ASIC equipment and other areas of the industry such as the energy sector, Noti Hash will from now on show the data on the price of these companies on the stock exchange where they operate.

Quote of companies d and mining on the stock market. Source: Nasdaq, Bloomberg.

CriptoNoticias also reported that more mining companies are reaching Wall Street markets , as was the case with Greenidge, which merged with Support.com and is already listed on Nasdaq, as well as Argo Blockchain, which is already doing a round to offer its shares to the markets, without being listed still.

The growth that some mining companies have had in the stock markets during the last year, and their relationship with the energy industry and hardware manufacturing, among others, could be the Prelude to a future where Bitcoin mining consolidates its influence on finance worldwide.

Photograph of the week

Yesterday, September 22, a secret meeting took place between the oil and gas industry and Bitcoin miners, in Austin, Texas, United States. Source: Twitter.

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Sandra Loyd
Sandra is the Reporter working for World Weekly News. She loves to learn about the latest news from all around the world and share it with our readers.

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