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2019 Q2 Cryptocurrency Mining Industry Quarterly Report Aug 2019
ANALYSTS
Shize Qin, Viola Shen [email protected]
Find, Create, and Spread Value in Blockchain.
TokenInsight also provides in-depth analysis on projects, industry research report and consultancy service, further information is available by following contacts:
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TABLE OF CONTENTS
1 Predictions of Bitcoin Price and Mining Difficulty 5
1.1 Predictions of Bitcoin Price 5
1.2 Predictions of Mining Difficulty 6
2 Comprehensive Analysis of Mining Hardware 7
2.1 Payback Cycle of High Power Efficiency Bitcoin Mining Hardware
7
2.2 Profile of Mining Hardware Market 8
2.3 Return on Static Investment 9
2.4 Return on Dynamic Investment - Electricity Rate 11
2.5 Return on Dynamic Investment - Difficulty 12
3 Cloud Computing 14
3.1 Mining Cost of Different Cloud Computing Power Products
15
3.2 Mining Cost of Cloud Computing Power Products vs. Bitcoin Purchase
16
4 Mining Pool 17
4.1 Introduction to Mining Pools 17
4.1.1 Definition of Mining Pool 17
4.1.2 Mainstream Settlement Methods 17
4.2 Distribution of Computing Power of Mining Pools 18
5 Hot Issues 20
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OVERVIEW
As a core component of the blockchain ecosystem, cryptocurrency mining plays an important role in maintaining the stability of Proof of Work (PoW) cryptocurrency networks and the basic value of currencies.
During the second quarter of 2019, Bitcoin price soared, leading to a fast payback of the mining industry. Despite the considerable hike in the price of mining hardware, the supply of mining machines still failed to meet market demand in the second quarter, thus making it difficult for miners to purchase mining hardware for their operations. However, the market saw a solid increase in the supply of cloud computing power products as the spike in Bitcoin price generated optimistic expectations about the future crypto market outlook, opening the doors for ordinary investors to readily enter the mining market.
TokenInsight has prepared the 2019 Q2 mining industry research report based on data and analysis from the 2019 Q1 mining industry report, covering the recent market changes and trends with Bitcoin mining as the primary focus. This report aims at providing comprehensive information to the "miners" and ordinary investors in the industry so that they would be in a better position to make informed and realistic investment decisions.
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01. EXPECTATIONS OF BITCOIN PRICE AND MINING DIFFICULTY
1.1 Expectations of Bitcoin Price
Bitcoin price is expected to rise in the long term, and the ratio of price to mining difficulty is likely to decrease over a one-year period (August 14, 2019 - August 14, 2020).
‣ Figure 1-1 Simulation of Bitcoin Price Trend in the Coming Year (August 14, 2019-August 14, 2020） Source: TokenInsight
$10029 （August 14, 2019）
$20176 （August 14, 2020）
As shown in the figure, the 95% confidence interval of Bitcoin price in 2020 will be between $17,077.32 and $23,276.56. Moreover, this model does not take into account the effect of important events that move Bitcoin’s price; and the prices predicted herein are specifically in reference to mining hardware and computing processing investments rather than any other factors as TokenInsight does not provide financial advice.
Mining profitability highly depends on the relationship between the changing Bitcoin price trends and mining difficulty of the overall network. Historical data shows a positive correlation between Bitcoin price and mining difficulty, which means that the change (rise/fall) in the direction of Bitcoin price and mining difficulty are consistent under normal circumstances.
Mining profitability also depends on the state of the network, which is affected by both the price of Bitcoin and mining difficulty. The price of Bitcoin and mining hash rates are both determinants of the industry and further allow for additional arbitrage opportunities.
Given the strong interdependence between the price of Bitcoin and the state of the mining industry, TokenInsight uses mathematical statistics to predict the Bitcoin price trend in the upcoming year. The Monte Carlo Method, a common method used in the statistics which is based on the geometric Brownian motion, is adopted in this report to simulate the Bitcoin price-time curve for the coming year:
BTC Simulation Price($)$
Days
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EXPECTATIONS OF BITCOIN PRICE AND MINING DIFFICULTY
1.2 Expectations of Mining Difficulty
In the remaining half of 2019, the mining difficulty may be relatively higher than the Bitcoin price and the computing power is likely to see a drastic increase.
In view of the market payback seen in the first half of the year, mining equipments purchased by miners in the first and second quarters of 2019 will be delivered successively in the third and fourth quarters. Likewise, mining hardware with higher computing power, launched by mining hardware manufacturers, will be put into operation in the remaining half of the year. TokenInsight concludes that all these factors will lead to an increase in the computing power in the second half of 2019, increasing the overall difficulty of mining.
The average increase in mining difficulty for each 14-day Bitcoin difficulty adjustment cycle was 4.73% in the second quarter of 2019 compared to the first quarter in which it was 3.29%. At present, the Bitcoin mining difficulty on the overall network clocks in at around 9.98 T and the average computing power is 74.35 EH/s. Based on the premise that the price of Bitcoin will increase steadily as described in the previous section, the minimum average increase in computing power seen from the difficulty adjustment cycle will reach 5% in the third and fourth quarters of 2019. Predictions about the comprehensive increase in mining difficulty and the computing power by the end of 2019 are shown as follows
‣ Figure 1-2 Conservative Predictions about the Bitcoin Mining Difficulty Trend in 2019 (January to December, 2019) Source: TokenInsight and btc.com
Jul'19 Sep'19 Nov'19 Dec19
Optimistically�Predicted�Mining�Di culty�(T)
Jul'19 Sep'19 Nov'19 Dec19
Conservatively�Predicted�Mining�Di culty�(T)
17.14T
14.74T
• According to conservative predictions, mining difficulty will increase to 14.74 T, and Bitcoin computing power will increase by 48% at the maximum, and reach to 109 EH/s.
• According to optimistic predictions, mining difficulty will increase to 17.14 T, and Bitcoin computing power will increase by 72% at the maximum, and reach to 127 EH/s.
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02. COMPREHENSIVE ANALYSIS OF MINING HARDWARE
Innosilicon’s T3-43T Bitcoin miner, which has an energy consumption ratio below 50 J/T, is the first choice among all the current mining hardware.
‣ Figure 2-1 Static Payback Profitability of SHA256 Mining Hardware in 2019,Q2
Names of high power efficiency Bitcoin mining
hardware
ManufacturerPower
(W) Computing
power (Th/s)
Mining hardware price (￥)
Power efficiency per unit
computing power (J/T)
Price per unit
computing
power (￥)
BTC price
($)
ROI (annual)
Static payback
cycle (day(s))
Innosilicon�T3�43T Innosilicon 2,100 43 10,921 49 254 11,811 2.42 150.58
Whatsminer�M20S MicroBT 3,264 68 18,403 48 271 11,811 2.28 159.79
Ebang�Ebit�E12++ Ebang 2,500 50 16500 50 330 11,811 1.85 196.79
Ebang�Ebit�E11++ Ebang 1,980 44 15,400 45 350 11,811 1.79 203.62
Antminer�S17 Bitmain 2,385 53 20,670 45 390 11,811 1.61 226.89
Sources: TokenInsight, Innosilicon, Pangolinminer and Ebang; The data was acquired on August 7, 2019; The exchange rate for USD against RMB on August 7, 2019: 1 USD = 7.06 RMB.
According to the table above, among mining machines with energy consumption ratio per unit computing power below 50 J/T, Innosilicon’s manufactured T3-43T Bitcoin miner has the shortest payback cycle of 150 days. Its payback cycle is shorter than both the Ebang Ebit E11++ and Antminer S17, which have the payback cycle of 203 and 226 days respectively. Due to the rise in Bitcoin price, the payback cycle of Innosilicon’s T3-43T Bitcoin miner was shortened by nearly 100 days in the second quarter than that of the previous quarter. However, the cost performance of the mining hardware increased significantly (BTC price: 1BTC=$11,811 by ... 2019 [AD2], theoretical revenue: 0.0000252BTC/1T/day).
The High Power Efficiency Bitcoin Mining Hardware continued to perform well in the second quarter of 2019. Especially, Innosilicon’s T3-43T Bitcoin miner received widespread attention in the market as it reduces the cost payback cycle by nearly 40% in the second quarter.
Although the current mining hardware, Antminer S17 and Ebit E11++, have higher power efficiency ratios, Innosilicon T3-43T is still the best choice among mining hardware as it is capable of operating with power consumption ratio below 50 J/T in terms of the comprehensive cost of the computing power.
2.1 Comparison of High Power Efficiency Bitcoin Miners
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COMPREHENSIVE ANALYSIS OF MINING HARDWARE
2.2 Profile of Mining Hardware Market
The prices of popular mining hardware dramatically increased during the second quarter and the demand of mining hardware exceeded total supply. As the mining costs increased, miners' payback cycles were shortened in the second quarter than the previous quarter.
‣ Figure 2-2 Power efficiency & Price List of Popular Mining hardware
Currencies for mining
Names of mining
hardwareManufacturer Power
(W)Computing
power
Power efficiency per unit
computing power(J/S)
Mining hardware price(￥)
Price per unit
computing power(￥/T)
Futures (Yes/No)
BTC/BCH
Antminer�S17 Bitmain 2,385 53�Th/s 45 20,670 390.00 Yes
Ebang�Ebit�E11++ Ebang 1,980 44�Th/s 45 15,400 350.00 Yes
Innosilicon�T3�43T Innosilicon 2,100 43�Th/s 49 10,921 253.98 Yes
AvalonMiner�921 Caanan 1,700 20.0�Th/s 85 4,390 219.50 Yes
Antminer�S9k Bitmain 1,148 13.5�Th/s 85 2,350 174.07 Yes
AvalonMiner�851S Caanan 1,540 14.5�Th/s 106 2,890 199.31 Yes
Ebang�Ebit�E12++ Ebang 2,500 50.0�Th/s 50 16,500 330 Yes
Innosilicon�T3+�57T Innosilicon 3,300 57.0�Th/s 58 16,239 284.89 Yes
AvalonMiner�852 Caanan 1,500 15.0�Th/s 100 3,190 212.67 Yes
Antminer�S9�SE Bitmain 1,280 16.0�Th/s 80 4,700 293.75 No
Antminer�S9j Bitmain 1,350 14.5�Th/s 93 3,620 249.66 Yes
Whatsminer�M20S MicroBT 3,264 68�Th/s 48 18,403 270.63 Yes
Whatsminer�M21S MicroBT 3,360 56.0�Th/s 60 13,172 235.21 Yes
ETH/ETC
Antminer�E3�(190Mh) Bitmain 760 190�Mh/s 4.00�J/M 8,134 42.81 /Mh -
PandaMiner�B3�Pro Pandaminer 1,250 230�Mh/s 5.40�J/M 10,500 45.65 /Mh -
LTC
Innosilicon�A4+�LTCMaster Innosilicon 2,100 2200�Mh/s 1.05�J/M 21,000 9.55� /Mh -
Antminer�L3+�(600Mh) Bitmain 800 504�Mh/s 1.59�J/M 1,855 3.68� /Mh -
Antminer�L3++�(596Mh) Bitmain 942 580�Mh/s 1.62�J/M 1,715 2.96� /Mh
Sources: TokenInsight, Bitmain, AvalonMiner, Innosilicon, and Ebang; The data was acquired on August 7, 2019; The exchange rate for USD against RMB on August 7, 2019: 1 USD = 7.06 RMB.
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COMPREHENSIVE ANALYSIS OF MINING HARDWARE
2.3 Return on Static Investment of Mining Hardware
The mining hardware market performed relatively well in the second quarter:
• Major mining hardware manufacturers wrestled to launch their own powerful SHA256 mining machines one after another based on the latest market trends such as the insufficient supply of mining hardware and an increased demand on computing power. A case in point is Whatsminer M20S launched by Pangolinminer. The mining hardware features the computing power of 68 Th/s and the price per unit
computing power is (270.63￥/T), and is advantageous to most mainstream mining
hardware. • Some of the popular mainstream mining hardware such as Antminer S17, Ebang Ebit
E11+ and Innosilicon’s T3 43T were out of stock during the second quarter. These mining machines are currently being sold on the manufacturers' official websites in the form of future deliverables, and will be mainly delivered in October and November of this year.
• In the second quarter, some of the popular mining hardware with low and medium computing power were withdrawn from the market, citing product iteration or unshelving as reasons. The withdrawn mining hardware include Antminer S15 and Antminer T9+ of Bitmain and AvalonMiner 841 of Canaan.
• In addition to SHA256 mining hardware for BTC/BCH, the Equihash miner for ETH and the Scrypt miner for Litecoin (LTC) were relatively unpopular in the second quarter. Affected by the reward halving of LTC, Scrypt miners for LTC have been unshelled from the official websites of most of the major mining hardware manufacturers. As a result, the overall mining revenue of LTC sharply declined.
Bitcoin mining revenues mainly consist of the block rewards acquired by miners during the block generation, and the mining costs are mainly comprised of mining hardware purchasing and operating costs, and electricity rates. The formula of return on investment for mining is shown below based on the above-mentioned factors affecting the mining costs:
Where, PRT is the price per unit computing power, Diff is the BTC mining difficulty, BR is the number of number of BTCs as block reward, PRBTC is the market price of BTC, PRe is the electricity rate, and WT is the power efficiency ratio per unit computing power. We neglect the return from transaction fees and the operating costs of mining hardware herein.
The payback cycle of the initial input cost can be estimated according to the cost per unit of computing power, and the daily revenue per unit computing power.
At the same time, the price of mining hardware shot up several times in the second quarter with dramatic increases in the price of Bitcoin. It should be noted that miners' overall revenue and the payback cycle do not simply form a linear relationship, and the price per unit computing power, power efficiency, mining difficulty and other factors shall be taken into account and calculated accurately. Therefore, TokenInsight takes SHA256 mining hardware (BTC/BCH) as an example, and comprehensively computes the mining revenue based on different mining difficulties, electricity rate as well as the block reward to help miners invest in the mining hardware rationally. Details will be described below.
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The one-year rate of return on investment and payback cycle of each mining hardware are presented in the table below:
Names of mining
hardwareManufacturer Power
(W)Computing
power
Mining hardware price (￥)
Power efficiency per unit
computing power (J/T)
Price per unit
computing power (￥)
BTC price ($)
ROI (annual)
Static payback
cycle (day(s))
Antminer S9k Bitmain 1,148 13.5 Th/s 2,350 85 174 11,811 2.90 125.90
Whatsminer M21S MicroBT 3,360 56.0 Th/s 13,172 60 235 11,811 2.47 147.66
Innosilicon T3 43T
Innosilicon 2,100 43 Th/s 10,921 49 254 11,811 2.42 150.58
AvalonMiner 921 Caanan 1,700 20.0 Th/s 4,390 85 220 11,811 2.30 158.73
Whatsminer M20S MicroBT 3,264 68 Th/s 18,403 48 271 11,811 2.28 159.79
AvalonMiner 851S Caanan 1,540 14.5 Th/s 2,890 106 199 11,811 2.21 165.44
AvalonMiner 852
Cannan 1,500 15.0 Th/s 3,190 100 213 11,811 2.16 169.20
Innosilicon T3+ 57T Innosilicon 3,300 57.0 Th/s 16,239 58 285 11,811 2.06 176.89
Antminer S9j Bitmain 1,350 14.5 Th/s 3,620 93 249.66 11,811 1.92 189.88
Ebang Ebit E12++ Ebang 2,500 50.0 Th/s 16500 50 330.00 11,811 1.85 196.79
Ebang Ebit E11++
Ebang 1,980 44 Th/s 15,400 45 350.00 11,811 1.79 203.62
Antminer S9 SE Bitmain 1,280 16.0 Th/s 4,700 80 293.75 11,811 1.77 206.16
Antminer S17 Bitmain 2,385 53 Th/s 20,670 45 390 11,811 1.61 226.89
Sources: TokenInsight, Bitmain, AvalonMiner, Innosilicon, and Ebang; The data is acquired on August 7, 2019; The exchange rate for USD against RMB on August 7, 2019: 1 USD = 7.06 RMB.
‣ Figure 2-3 Static Payback Profitability of SHA256 Mining Hardware
Although the price of most mining hardware have nearly doubled, the overall payback cycles of mining hardware were shortened in the second quarter due to the soaring
price of Bitcoin. If the electricity rate is 0.35￥/kWh and the mining difficulty remains unchanged, the mining hardware with the shortest payback cycle is Antminer S9k with small computing power produced by Bitmain at the current Bitcoin price (11,811USD) and its payback cycle is nearly 126 days. Antminer S17, a classic product of Bitmain, had the longest payback cycle of 226.89 days after uncontrollable factors such as after-sales maintenance costs were eliminated. This analysis is solely based on the payback cycle which shows that mining hardware with short payback cycles generally have higher power efficiency per unit of computing power. Meanwhile, the table also indicates that there is a significant positive correlation between the payback cycle and the price per unit of computing power, and the lower the price per unit computing power is, the shorter the payback cycle of the mining hardware will be. It is worth noting that there is no significant correlation between the computing power per unit of mining hardware and the payback cycle. When miners invest in mining hardware, they should consider the cost per unit of computing power, power efficiency ratio per unit computing power.
COMPREHENSIVE ANALYSIS OF MINING HARDWARE
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2.4 Return on Dynamic Investment - Electricity Rate Electricity price is a key factor which affects mining revenue. As a variable cost, it determines the lowest operating costs of mining hardware to a certain extent, i.e. the shutdown coin price. Meanwhile, the change in electricity rate will also affect the payback cycle of mining hardware and the return on investment.
Variable costs such as later operation and maintenance costs are unaffected when the difficulty, price and the block reward remain unchanged. TokenInsight computes the revenues of mainstream mining hardware in the market based on different electricity rates. Future results are shown in the table below:
Names of mining Hardware Manufacture Power
(W)Computing
power
Mining Hardware price (￥)
Annual ROI per unit
computing power
ROI change
(%)
Shutdown coin price ($)
Antminer�S17 Bitmain 2,385 53�Th/s 20,670 1.56 -3.14% 4,613.351166
Ebang�Ebit�E11++ Ebang 1,980 44�Th/s 15,400 1.74 -3.14% 3,255.064847
Innosilicon�T3�43T Innosilicon 2,100 43�Th/s 10,921 2.34 -3.47% 2,649.471387
AvalonMiner�921 Caanan 1,700 20.0�Th/s 4,390 2.13 -7.38% 4,611.341867
Antminer�S9k Bitmain 1,148 13.5�Th/s 2,350 2.69 -7.38% 2,604.051878
AvalonMiner�851S Caanan 1,540 14.5�Th/s 2,890 1.97 -10.58% 5,761.838925
Ebang�Ebit�E12++ Ebang 2,500 50.0�Th/s 16500 1.79 -3.58% 5,425.108078
Innosilicon�T3+�57T Innosilicon 3,300 57.0�Th/s 16,239 1.97 -4.31% 3,140.852045
AvalonMiner�852 Caanan 1,500 15.0�Th/s 3,190 1.95 -9.55% 5,050.962694
Antminer�S9�SE Bitmain 1,280 16.0�Th/s 4,700 1.65 -6.74% 2,712.554039
Antminer�S9j Bitmain 1,350 14.5�Th/s 3,620 1.76 -8.5% 2,441.298635
Whatsminer�M20S MicroBT 3,264 68�Th/s 18,403 2.21 -3.4% 4,340.086463
Whatsminer�M21S MicroBT 3,360 56.0�Th/s 13,172 2.36 -4.52% 2,441.298635
Sources: TokenInsight, Bitmain, AvalonMiner, Innosilicon, and Ebang;The data is acquired on August 7, 2019. The exchange rate for USD against RMB on August 7, 2019: 1 USD = 7.06 RMB.The cells in red indicate the information of mining hardware with high computing power.With regards to the changes seen in electricity rates, the mining revenue of miners with high computing power features low elasticity while the mining revenue of the mining hardware with low computing power features high elasticity, according to the figure. Meanwhile,
when the electricity rate increases from the conventional 0.35￥/kWh to 0.4￥/kWh based on the current mining difficulty and token price, the shutdown coin price may increase. Under such circumstances, miners should pay attention to the influence of the electricity rates on their own operation costs.
COMPREHENSIVE ANALYSIS OF MINING HARDWARE
‣ Figure 2-4 Changes of Return on Investment in SHA256 Mine hardware and Its Shutdown Coin Price (Electricity Rate: 0.4￥/kWh)
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2.5 Return on Dynamic Investment - Difficulty The BTC mining difficulty increases by 4.73% on average throughout the network, increasing greatly compared with previous months. Based on the current difficulty
adjustment period, as well as the electricity cost of ￥0.35/kWh, the applicable coin price
and the difficulty on August 7, 2019, the income of BTC can be cauclated when the mining difficulty increases by 3%, 4% and 5%.
‣ Figure�2-5�Dynamic�Payback�Cycle�of�Bitcoin�Mining�Hardware�if�Difficulty�Increases�by�3%
Names of mining
hardwareManufacturer Power
(W) Computing
power
Coin price
($)
Power efficiency per unit
computing power (J/
Mining hardware price (￥)
Price per unit
computing power (￥/
T)
Payback cycle
(day(s))
Payback per T (￥)
Antminer S9k Bitmain 1,148 13.5 Th/s 11,811 85 2,350 174.07 168.83 267.36
Whatsminer M21S
MicroBT 3,360 56.0 Th/s 11,811 60 13,172 235.21 196.82 387.211
Innosilicon T3 43T Innosilicon 2,100 43 Th/s 11,811 49 10,921 253.98 196.8 452.28
AvalonMiner 921
Caanan 1,700 20.0 Th/s 11,811 85 4,390 219.50 252.68 267.37
Whatsminer M20S MicroBT 3,264 68 Th/s 11,811 48 18,403 270.63 224 458.64
AvalonMiner 851S Caanan 1,540 14.5 Th/s 11,811 106 2,890 199.31 Unprofitable 189.96
AvalonMiner 852
Caanan 1,500 15.0 Th/s 11,811 100 3,190 212.67 Unprofitable 210.32
Innosilicon T3+ 57T Innosilicon 3,300 57.0 Th/s 11,811 58 16,239 284.89 266.3 399
Antminer S9j Bitmain 1,350 14.5 Th/s 11,811 93 3,620 249.66 Unprofitable 235.31
Ebang Ebit E12++ Ebang 2,500 50.0 Th/s 11,811 50 16,500 330.00 308.18 445.99
Ebang Ebit E11++ Ebang 1,980 44 Th/s 11,811 45 15,400 350.00 308.93 478.28
Antminer S9 SE Bitmain 1,280 16.0 Th/s 11,811 80 4,700 293.75 Unprofitable 288.66
Antminer S17 Bitmain 2,385 53 Th/s 11,811 45 20,670 390.00 378.89 478.28
Sources:�TokenInsight,�Bitmain,�AvalonMiner,� � Innosilicon,�and�Ebang;�The�data��was�acquired�on�August�7,�2019 �The�exchange�rate�for�USD�against�RMB�on�August�7,�2019:�1�USD�=�7.06�RMB �The�cells�in�red�indicate�the�information�of�mining�hardware�with�high�computing�power.�
When the difficulty increases by 3% at the current BTC price ($11,811), mining hardware with high computing power feature high payback capacity. Although mining hardware with low computing power have short payback cycles in a static scenario, they still lag behind mining hardware with high computing power since the payback capacity of mining hardware is generally low as the difficulty increases.
Except for the Antminer S9k, high power efficiency mining hardware such as the AvalonMiner 852, AvalonMiner 851S, Antminer S9j and Antminer S9 SE cannot realize payback returns if difficulty increases by 3%. Mining hardware with high cost per unit computing power feature long payback cycles.
COMPREHENSIVE ANALYSIS OF MINING HARDWARE
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Names of mining hardware
Manufacturer
Average difficulty increase of 4% Average difficulty increase of 4%
Payback cycle
(day(s))
Total payback
per T (￥)
Payback percentage
Payback cycle
(day(s))
Total payback
per T (￥)
Payback percentage
Antminer S9k Bitmain 210.29 203.62 116.97% Unprofitable 165.45 95.04%
Whatsminer M21S MicroBT 238.32 294.40 125.16% 336.30 238.75 101.50%
Innosilicon T3 43T Innosilicon 224.86 344.41 135.61% 280.81 279.08 109.88%
AvalonMiner 921 Caanan Unprofitable 203.74 92.82% Unprofitable 165.54 75.42%
Whatsminer M20S MicroBT 252.62 348.45 128.75% 336.68 282.33 104.32%
AvalonMiner 851S Caanan Unprofitable 144.62 72.56% Unprofitable 117.81 59.11%
AvalonMiner 852 Caanan Unprofitable 160.43 75.44% Unprofitable 130.63 61.42%
Innosilicon T3+ 57T Innosilicon 350.55 303.32 106.47% Unprofitable 245.93 86.32%
Antminer S9j Bitmain Unprofitable 179.45 71.88% Unprofitable 145.95 58.46%
Ebang Ebit E12++ Ebang 434.90 338.87 102.69% Unprofitable 274.59 83.21%
Ebang Ebit E11++ Ebang 448.35 363.28 103.80% Unprofitable 294.27 84.08%
Antminer S9 SE Bitmain Unprofitable 219.88 74.85% Unprofitable 178.60 60.80%
Antminer S17 Bitmain Unprofitable 363.28 93.15% Unprofitable 294.27 75.45%
Sources: TokenInsight, Bitmain, Canaan, Innosilicon, and Ebang;The data is acquired on August 7, 2019;The exchange rate for USD against RMB on August 7, 2019: 1 USD = 7.06 RMB.
According to the table above, when the computing power increases by 4% on average, nearly half of the mainstream mining machines cannot realize the payback from investment; when the computing power increases by 5%, most mining machines cannot realize the payback from investment. Among the only three mining machines which can realize the payback in case of 5% average increase in computing power, Whatminer M21S and Whatsminer M20S hover about the edge of failure to payback (Whatsminer M20S is currently the mining machine with the highest stand-alone computing power in the market). However, thanks to the high energy efficiency ratio and low cost per unit computing power, Innosilicon T3 43T manufactured by Innosilicon still features high payback capacity when the average increase in mining difficulty is up to 5%.
‣ Figure�2-6�Dynamic�Payback�Cycle�of�BTC�Mining�Hardware��if �Difficulty�Increases�by�4%�and�5%
COMPREHENSIVE ANALYSIS OF MINING HARDWARE
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03 . POWER OF CLOUD COMPUTING
BitDeer and VeryHash Continued To Lead the Market in the Second QuarterThe cloud computing power platform directly packages and manages the links of mining hardware purchase, logistics, power supply, field selection, hardware operation and maintenance for users. Although the platform packages are flexible, the power of cloud computing lowers the mining threshold, making the mining more popular.
BitDeer and VeryHash continued to lead as the best cloud computing power mining platforms in the second quarter of 2019 even as most computing power products on the platforms changed in the second quarter:
• The standard S9 and S11 products were removed from BitDeer platform (users can choose their own mining pool with the charge of 4%), and there are only S15 and S17 cloud computing power products on the platform currently. As of the release of this report, there were only 360-day standardized products of S15 mining hardware model on the platform for sale with quotas, and the cloud computing power products were in short supply.
• The cloud computing power products seen on VeryHash platform (users cannot choose their own mining pool with the charge of 1%) have been transformed from the previous fixed computing power to the adjustable computing power. The service time of computing power are fixed at 150 days, while the cloud computing power mining is only provided for S9 mining hardware. This product offering charges a fixed mining cost per Bitcoin unit thereby hedged the risk for platform suffering from the high volatility of Bitcoin price.
• In this chapter, TokenInsight analyzes the cost and business logic of BitDeer and VeryHash’s cloud computing power mining.
Additionally, since the cloud computing power mining can lower the threshold for users to obtain digital currencies, the question to be considered whether it is more cost-effective than purchasing coins directly from the exchange
After considering part of the risks, the cloud computing power mining has a certain cost advantage relative to buying coins. This cost advantage is obvious especially when coin prices are soaring. Because cloud computing power contracts are standardized products, their price is relatively stable. The contract product price will not be adjusted quickly as the coin price fluctuates. This creates a low-risk arbitrage opportunity: Bitcoin will be obtained at a low price incessantly in the future through the cloud computing power contract, and then it can be sold for profit through hedging at the present price higher than the current predicted cost in the contract exchange.
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POWER OF CLOUD COMPUTING
3.1 Mining Cost of Different Cloud Computing Power Products
‣ Figure 3-1 Expenses of BitDeer and VeryHash Mining Products
Cloud computing
power manufacturer
Hardware model
Power consumption
ratio
Lease period (day)
Quantity of computing power (T)
Lease expense per unit
computing power ($ T/day)
Electric charge per unit
computing power ($ T/day)
Lease expense of computing power ($)
Electricity rate ($)
BitDeer S17 45 J/T 120 50 0.1599 0.065 959.4 387
BitDeer S17 45 J/T 180 50 0.1477 0.065 1,329.3 580.5
BitDeer S17 45 J/T 240 50 0.1371 0.065 1,645.2 774
BitDeer S17 45 J/T 360 50 0.128 0.065 2,304 1,161
BitDeer S15 57 J/T 120 50 0.1329 0.097 797.4 582
BitDeer S15 57 J/T 180 50 0.1227 0.097 1,104.3 873
BitDeer S15 57 J/T 240 50 0.114 0.097 1,368 1,164
BitDeer S15 57 J/T 360 50 0.1064 0.097 1,915.2 1,746
VeryHash S9 85 J/T 150 50 0.12 0.110 900 825
VeryHash S9 85 J/T 150 100 0.12 0.110 1,800 1,650
VeryHash S9 85 J/T 150 150 0.12 0.110 2,700 2,475
VeryHash S9 85 J/T 150 200 0.12 0.110 3,600 3,300
source：bitdeer.com, veryhash.com
• On BitDeer platform, the longer the leasing days of cloud computing power are, the lower the lease expense of unit computing power. At the same time, the more advanced the model is, the higher the lease expense of unit computing power will be.
• On VeryHash platform, the longer the cloud computing power is rented, the lease expense of unit computing power remains constant at 0.12$T/d level.
The costs of obtaining Bitcoins by mining vary based on models and lease periods of BitDeer and VeryHash. The specific cost on each of the platforms is shown in the following section.
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3.2 Mining Cost of Different Cloud Computing Power Products Vs. Coin Purchase
‣ Figure 3-2 Mining Cost of BitDeer and VeryHash
Cloud computing
power manufacturer
Hardware model
Power consumption
ratio
Lease period (day)
Quantity of
computing power (T)
Trusted rate
(￥/kWh))
Total expense
($)
Mining BTC
Mining cost when the average mining difficulty is n times the
current mining difficulty ($)
Current difficulty
1.3 times
difficulty
1.5 times
difficulty
BitDeer S17 45�J/T 120 50 0.42 1,335 0.1512 8,828 11,476 13,242
BitDeer S17 45�J/T 180 50 0.42 1,892 0.227 8,344 10,847 12,516
BitDeer S17 45�J/T 240 50 0.42 2,396 0.3024 7,923 10,300 11,885
BitDeer S17 45�J/T 360 50 0.42 3,430 0.454 7,562 9,831 11,343
BitDeer S15 57�J/T 120 50 0.499 1,362 0.1512 9,008 11,710 13,511
BitDeer S15 57�J/T 180 50 0.499 1,951 0.227 8,603 11,184 12,904
BitDeer S15 57�J/T 240 50 0.499 2,497 0.3024 8,258 10,735 12,386
BitDeer S15 57�J/T 360 50 0.499 3,609 0.454 7,956 10,343 11,934
VeryHash S9 85�J/T 150 50 0.38 1,725 0.189 9,127 11,865 13,690
VeryHash S9 85�J/T 150 100 0.38 3,450 0.378 9,127 11,865 13,690
VeryHash S9 85�J/T 150 150 0.38 5,175 0.567 9,127 11,865 13,690
VeryHash S9 85�J/T 150 200 0.38 6,900 0.756 9,127 11,865 13,690
Source: TokenInsight, bitdeer.com, veryhash.com；The data is acquired on August 7, 2019.
The exchange rate for USD against RMB on August 7, 2019: 1 USD = 7.06 RMB.
In general, BitDeer’s S17 has lower power consumption than its S15. The average mining cost of S17 is slightly smaller than S15 in all three difficulty scenarios. With 360 leasing days of cloud computing power, BitDeer S17 has the lowest mining cost in various series of products of this manufacturer; however, BitDeer15 has the highest mining cost in various series of products of this manufacturer with 120 leasing days of cloud computing power. In addition, the mining cost of VeryHarsh does not vary with the change in types of hardware.
POWER OF CLOUD COMPUTING
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04. MINING POOL
4.1 Introduction to Mining Pools
4.1.1 Definition of Mining Pool
Mining pools are a platform for miners to mine which collects computing power through the network and allocate the income. With the continuous increase of the Bitcoin network computing power, the computing power of a single piece of equipment accounts for a very small proportion of the overall Bitcoin network computing power. As a result, it takes a very long time to successfully obtain mining rewards. Since the emergence of mining pools, it has allowed miners to pool resources and generate blocks more quickly and intensively, thus obtaining block rewards in a timely manner. In a broad sense, the mining pool can be considered as a platform to link any computing power together and share the earnings. Not only PoW cryptocurrencies require mining pools to provide services, but Proof of Stake (PoS) and Delegated Proof of Stake (DPoS) digital currencies also need to be centralized to generate "computing power" for obtaining rewards. Away from the blockchain world, in AI/scientific computing, if there is a platform that centralizes other people's graphics card/TPU computing power and then allocates AI/scientific computing tasks and allocates income, such shared and rented platform can also be regarded as a special mining pool.
4.1.2 Mainstream Settlement Methods
• The earnings will be allocated according to the previous miners' workloads after the generation of blocks in PPLNS mining pool, and the mining pool does not assume the risk of advancing BTC in this way. About 144 new blocks will be generated. If the computing power share of mining pool is small, it may lead to unstable number of blocks generated, therefore, the earning of miners under PPLNS may be unstable.
• PPS miners distribute income based on the workload proof generated after the computing power of mining hardware is connected to the mining pool. The income of miners is independent of the block generation of mining pool and is only related to the workload of mining hardware. The mining pool undertakes the risk of block report instability for miners, as if miners work for the mining pool and receive a fixed salary according to the workload. Compared with PPLNS, the PPS miners’ service charge is higher. In addition to the allocation of block rewards, PPS also allocates transaction fees.
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MINING POOL
4.2 Distribution of Computing Power of Mining Pools Bitcoin computing power ratio is the most important index to measure the strength of PoW type mining pool.
The most important digital currency of mining pool for mining is Bitcoin, and the computing power of its ratio generally determines most of the income of the mining pool. Having higher computing power ratio means that the mining pool will have more income to invest in the operation of mining pool. More income usually means higher security, more complete currencies, more diversified settlement methods, more ecological function expansion (such as wallets and exchanges) and more traffic availability for advertising.
These advantages will further promote the mining pool in gaining more computing power, so the mining pool may have a Matthew effect. The mining pool outside the top 15 may be gradually eliminated from the competition.
Unlike crypto exchanges that have the ability to counterfeit market trading volumes, the historical computing power of mining pools are almost entirely recorded on blocks without counterfeit opportunities. Therefore, BTC computing power ratio is an important objective metric to measure the comprehensive strength of mining pools.
Some mining pools such as Ethermine, SparkPool and Nanopool mainly serve graphics card mining machines, which are mainly used for mining ETH and other digital currencies. In the second quarter, Bitcoin head (top 16) mining pool had little change and there was no new mining pool. BTC.com took the first position in the computing power ranking while AntPool ranked third. As the computing power of Slushpool decreased by more than 2% compared with that in the previous quarter, Slushpool’s ranking dropping from second position to fifth.
Figure 4-1 Computing Power Ranking of Mining Pool BTC in the Second Quarter of 2019 (as of August 13, 2019)
source: BTC.com
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‣ Figure 4-2 Computing Power Ranking of Mining Pool BTC in the Second Quarter of 2019
No. Mining poolComputing
power ratio
Quantity of block
Quantity of
empty block
Proportion of empty
block
Avg. Tx Fees Per
Block (BTC)
Miner fee and block
reward ratio
Average block size
0 Network Hashrate 100.00% 13,785 66 0.48% 0.674 5.39% 1,137,188
1 BTC.com 19.86% 2,738 42 1.53% 0.665 5.32% 1,126,419
2 AntPool 12.58% 1,734 0 0.00% 0.664 5.31% 1,151,974
3 F2Pool 12.30% 1,695 13 0.77% 0.665 5.32% 1,120,716
4 Poolin 9.87% 1,360 0 0.00% 0.664 5.31% 1,138,846
5 SlushPool 8.92% 1,230 2 0.16% 0.665 5.32% 1,131,412
6 BTC.TOP 7.94% 1,094 4 0.37% 0.698 5.58% 1,151,496
7 ViaBTC 7.68% 1,059 2 0.19% 0.666 5.32% 1,136,186
8 unknown 5.63% 776 1 0.13% 0.657 5.26% 1,133,057
9 Huobi.pool 4.88% 673 1 0.15% 0.638 5.11% 1,109,549
10 BitFury 4.16% 574 0 0.00% 0.692 5.54% 1,155,091
11 BitClub 1.33% 183 0 0.00% 0.816 6.53% 1,183,685
12 1M1X 1.16% 160 0 0.00% 0.989 7.91% 1,219,629
13 Bixin 1.10% 152 1 0.66% 0.669 5.35% 1,149,793
14 Bitcoin.com 1.07% 148 0 0.00% 0.763 6.10% 1,171,021
15 WAYI.CN 0.75% 103 0 0.00% 0.784 6.27% 1,225,925
16 okpool.top 0.56% 77 0 0.00% 0.505 4.04% 1,100,854
Source: TokenInsight & BTC.com; The data is as of August 11, 2019.
MINING POOL
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05. HOT ISSUES
1. On April 28, 2019, Bitmain officially launched the new product ANTMINER T17. ANTMINER T17 carries the second generation 7nm chip BM1397 of Bitmain, with computing power of 40 TH/s and power efficiency of 55J/T at the same time. It supports the mining of BTC, BCH and other cryptocurrencies. Compared with the last generation ANTMINER T15, Antminer T17 has 73.9% more computing power and 17.9% decreased power efficiency. As a result, the cost performance of the whole hardware has greatly improved.
2. On May 3, 2019, Regie de l’energie, the energy regulator in Quebec, Canada, issued new rules on cryptocurrency mining, requiring Hydro-Quebec to allocate 300 megawatts (MW) power to the blockchain industry.
3. On June 18, 2019, Bitmain released new products, Antminer S9 SE and Antminer S9K. According to officially disclosed information, the recently launched S9 SE is an updated iteration version of the classic model S9. The standard computing power of Antminer S9 SE is equal to 16 TH/S and the power efficiency is 80J/T; Antminer S9 K has models of 13.5T and 14T, both of which can support the mining of BTC, BCH and other cryptocurrencies.
4. On June 24, 2019, the prospectus submitted by Ebang International Holdings Inc., one of the world's top three mining hardware manufacturers, on HKEX was declared invalid, failing to be listed on HKEX for a second time. Ebang International Holdings Inc. had submitted its prospectus to HKEX in June and December last year respectively.
5. On June 20, 2019, the governor of Leningrad Oblast, Russia, and the Information Services Department jointly announced the opening of the largest minefield in Russia. The minefield, which is being established with a total investment of about USD 7.3 million, will cover an area of 4,000 m2 and will be equipped with 3,000 mining hardware It will have an energy capacity of about 20 MW.
6. On June 28, 2019, Iranian state television said that the Iranian authorities seized about 1,000 Bitcoin mining hardware from two abandoned factories. Earlier, the Iranian authorities issued a warning that Bitcoin mining led to a surge in electricity consumption while the electricity charge was subsidized by the government at the same time.
7. On July 21, 2019, the economic council of Iran officially approved the cryptocurrency mining, making it a legal industry in Iran. Presently, the Iranian government is seeking ways to regulate the mining within its existing legal structure.
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