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The latest Q1 2024 Retail Index report from Luxor Technology looks at the performance of the Bitcoin mining sector after the fourth Bitcoin halving. This report provides important insights into key metrics such as Bitcoin Hashrate, Hashprice, Hashrate Forwards, and Bitcoin Mining Stocks, highlighting the Bitcoin mining industry's ability to adapt – as well as the challenges that await miners in the world of the 3,125 BTC block support.
Bitcoin Hashprice and Hashrate fluctuate
Now that the fourth halving has passed, Bitcoin miners are setting their eyes on two metrics in particular: the hash price and the network hash rate.
Hashprice is a measure of how much revenue miners can earn daily when hashing with a full pay-per-share mining pool. All other things being equal, we should expect the halving, which halves Bitcoin's block support, to halve its hash price.
But this did not happen immediately. Retail prices witnessed extreme fluctuations in the period immediately preceding and following the halving. In the hour the halving occurred, the retail price fell to $74 USD/PH/day, but quickly rose to a peak of $183 USD/PH/day as transaction fees from rune trading activity rose. The hype around the runes was short-lived, and the retail price soon dropped to a record low of $44 USD/PH/day before stabilizing at its current level of $50 USD/PH/day. The previous all-time low for the hashrate, $55/hour/day, occurred in 2022 during the fallout from the FTX debacle, and the new hashrate reality highlights the brutal economics miners now face.
Which brings us to the next key metric that the halving impacted: retail. During Q1 2024, Bitcoin's 7-day average hash rate rose 19% to 611 exahashes/s, and will increase another 6% in April to an all-time high of 650 exahashes/s. As the situation stabilized after the halving, Bitcoin's hash rate fell by 10% from its all-time high to 580 EH/s.
Given that mining margins are compressed and summer is coming — which will likely necessitate curtailing energy consumption from industrial-scale mining farms in places like Texas, which is a headwind to hash rate growth — we should expect Bitcoin hash rate to see only marginal growth this year. .
Hashprice is traded on Contango
Notably, traders in hash rate markets believe that the hash rate has bottomed out (at least for now).
Luxor's Hashrate Forwards, a Bitcoin mining derivative that allows miners and other participants to buy and sell the hash rate at fixed prices on future dates, are traded in contango, meaning that the hash rate traders expect the hash rate to be higher in the coming months than the price. Current instant. This indicates a bullish sentiment among Hashrate Forwards traders, who expect an increase in the hash rate due to higher transaction fees or lower mining difficulty.
As mentioned in the last section, scaling back mining hotspots like Texas can temporarily halt the hash rate, thus improving the hash price and mining margins.
ASIC markets are witnessing price discovery
The ASIC market has seen a significant slowdown heading into the halving, with a notable decline in prices across different models despite a rise in the average retail price in Q1 2024. Unsurprisingly, price premiums for the Antminer S21 have risen compared to other models, indicating a shift A strategist among Bitcoin miners is moving towards more efficient hardware to mitigate the post-halving revenue decline.
Bitcoin mining stocks are in a hash rate and efficiency arms race
All major public Bitcoin miners increased their hash rate throughout 2023, however some miners took more aggressive steps to boost their hash rate in the early months of 2024. With block support now halved, it is imperative that miners Miners are equipping their ASIC fleets with the latest hardware to remain competitive in the hash rate arms race and lower their operating costs per unit of hash rate.
Forecasts and forecasts for 2024 and beyond
Barring a significant rise in the price of Bitcoin and/or increased transaction fees, 2024 will be a challenging year for Bitcoin miners. Now more than ever, transaction fees will play a crucial role in a miner's bottom line.
In terms of adapting to the new normal, those who have not done so in 2023 will need to get creative with their operational strategies. In addition to improving the energy efficiency of their fleet using the latest ASIC models and securing more favorable power contracts, they can use after-market firmware to optimize their ASICs, adopt more sophisticated hedging strategies, and look for alternative revenue sources or places to reduce operating costs.
In the US and Canadian context, we expect consolidation to be driven by M&A as companies take advantage of cheap selling prices for ASICs and mining facilities. As the mining sector continues to mature, mining will become more established and integrated with energy systems, and we believe the current halving era will accelerate this integration as miners rush to source electricity production to take advantage of the lowest possible energy costs. .
This is a guest post written by Alessandro Cecere and Colleen Harper. The opinions expressed are entirely their own and do not necessarily reflect the opinions of BTC Inc or Bitcoin Magazine.
