Author: Matías Andrade Source: Coin Metrics Translation: Shan Ouba, Golden Finance

Fourth in 2024 Quarterly Network State Report: Special Analysis of Mining Data

•The 2024 Bitcoin halving has a significant impact on miner profitability, although per terahash (TH /s) BTC revenue from mining hashrate has dropped significantly, but this has been partially offset by the recent surge in Bitcoin prices to over $105,000.

• Publicly traded Bitcoin mining company stocks exhibit higher volatility than Bitcoin price fluctuations. Companies with stronger balance sheets and more efficient mining rigs, such as Hut8, Bitdeer, and Core Scientific, have outperformed their peers.

•An analysis of the distribution of ASIC hardware on the Bitcoin network shows a significant shift in the dominance of mining hardware. Currently, the market is dominated by S19 series machines, reflecting the rapid pace of efficiency improvements in mining hardware, with operators constantly upgrading equipment to stay competitive.

•Looking ahead, Bitcoin miners’ ability to adapt to network supply adjustments, optimize operations, and take advantage of technological advances will be critical to their long-term competitiveness and profitability. It's important.

The global Bitcoin mining industry has grown into a complex and geographically widespread industry. Miners are constantly looking for the most favorable conditions to support their energy-intensive operations. Unlike the idealized vision of a “borderless, 24/7 cryptocurrency network,” the reality is that Bitcoin mining activity is highly sensitive to regional energy sources, climate conditions, and even cultural preferences.

This article will delve into the changing patterns and trends of the global Bitcoin mining industry. Through a detailed analysis of Bitcoin hashrate and mining difficulty data, we will reveal the distribution of mining hashrate and its evolution over time, leveraging the unique insights provided by Coin Metrics data.

One ​​of the most important events in the Bitcoin ecosystem is the regular halving of block rewards, with the most recent halving occurring in April 2024 . This highly anticipated event, which occurs approximately every four years, will bring Bitcoin toThe rewards received by miners are cut in half, effectively reducing the amount of new BTC supply entering circulation.

As expected, the 2024 halving has a significant impact on the Bitcoin mining industry. Our analysis of mining difficulty adjustments (shown in the chart below) shows that difficulty increased dramatically in the months leading up to the halving as miners raced to maximize their rewards before the reduction.

The reduction in block rewards directly affects the income of Bitcoin miners, as shown in the figure below Show. Our data shows that revenue per terahertz (TH/s) of mining hashrate denominated in BTC dropped significantly immediately after the halving, as miners had to endure receiving only half of the previous reward for each block they successfully verified.

While revenue denominated in BTC has declined, the price of Bitcoin has recently risen to $107,000+, partially offsetting the impact, as shown below. USD revenue per TH/s of mining power has recovered but remains below pre-halving levels as miners face the challenge of maintaining profitability amid reduced block rewards.

These trends highlight the challenges faced by Bitcoin miners in the face of planned supply adjustments to the network. Required resilience and adaptability. As the industry continues to evolve, miners need to optimize operations, find the most cost-effective energy sources, and leverage technological advancements to remain competitive in the ever-changing cryptocurrency mining landscape.

The performance of publicly traded Bitcoin mining stocks has shown a strong correlation with Bitcoin's price movements, but with significant volatility higher. As Bitcoin hits all-time highs in 2024, prices for mining companies have surged, although the trajectory has varied based on factors such as operating efficiency, debt levels and mining capacity.

Major mining companies such as Marathon Digital Holdings (MARA), Riot Platforms (RIOT), and CleanSpark (CLSK) have traded off 2023 lows Soared by hundreds of percentage points. However, this appreciation is not uniform across the industry. Stronger balance sheets, newer mining equipment, and more efficient companiesOften outperforms peers. Since July 2024, as shown in the chart below, the biggest risers have been Hut8, Bitdeer, and Core Scientific, with gains of 68%, 78.5%, and 60.2% respectively.

There are several factors driving this price action. Mining companies have high fixed costs for equipment and electricity, which means an increase in the price of Bitcoin can lead to an even greater boost in profitability. This also explains why mining stocks tend to be more volatile than Bitcoin itself, which has appreciated 54.3% in value over the same period.

The Bitcoin halving event is affecting valuations as investors take into account both the reduction in mining rewards and the history of price increases after previous halvings model. Finally, many miners held onto their mined Bitcoins during the crypto winter, essentially leveraging the price of Bitcoin. As the value of Bitcoin rises, these assets appreciate significantly, strengthening their financial position.

It is important to note that these stocks face unique risks in addition to Bitcoin price fluctuations. Energy costs, equipment obsolescence and regulatory issues can have a significant impact on its performance. Additionally, competition in the mining industry continues to increase and margins may come under pressure even in a rising Bitcoin price environment, which may lead to M&A activity and consolidation in the mining industry.

Bitcoin can be traced by analyzing random number patterns in mining blocks Developments in mining hardware to gain insight into the network’s technological advancements and security features. Each ASIC manufacturer uses a different method of scanning random numbers, creating an identifiable signature that allows researchers to determine which machines may have been responsible for mining a specific block. Pioneered and refined by Coin Metrics, this approach has become an important tool for understanding the makeup of the Bitcoin mining ecosystem.

Data shows that the dominance of mining hardware has experienced several changes in the past six years A major shift. The Antminer S9 miner, which was dominant until 2019-2020, has been almost completely phased out as the network has gone through a major technology upgrade cycle. The current landscape is dominated by S19 series machines, including XP, JPro and standard editions, which shareRepresents the majority of the network’s hash rate. The shift demonstrates the rapid pace at which mining hardware is improving in efficiency as operators continue to upgrade to remain competitive in an increasingly industrialized mining environment.

The 2024 halving event will reduce miner rewards by 50%, which will have a significant impact on the profitability and operations of Bitcoin miners worldwide. While BTC-denominated revenue per terahashrate fell immediately, the recent surge in Bitcoin prices has helped offset some of the negative impact, allowing miners to maintain a level of profitability. However, the industry still faces challenges in adapting to changes in network programmatic supply.

As the Bitcoin ecosystem continues to evolve, the mining industry will need to demonstrate resilience, adaptability, and a keen eye for optimizing operations to stay ahead of the curve.