The hashrate securing the Bitcoin network continues to soar, surging to over 40 EH/s in June 2018 despite several months of downward pressure on Bitcoin prices. Current hashrate is now well over double the 2017 peak of around 13 EH/s, or to frame it differently, hashrate has increased by over 100% across four months. Such growth is certainly impressive but must present something of a challenge to any companies operating within the mining sector, as continuous reinvestment becomes necessary in order to remain competitive and ensure a degree of profitability in the medium term.
The impressive surge in Bitcoin prices in the final months of 2017 will have pushed up mining profitability, and historically price appreciation tends to be followed by deployment of additional hashrate. However, the inelastic nature of setting up and turning on new ASIC mining equipment tends to result in a delay between rising Bitcoin prices and any resultant climb in hashrate. This is due to the time required to set up new facilities, especially as mining profitability tends to hinge upon miners obtaining rock-bottom electricity deals, which are only available in certain locations.
To put the scale of growth into perspective, the hash power that has come online since the end of 2017 is roughly equivalent to around 2 million top of the range SHA-256 ASIC units; a figure which greatly exceeds estimates for the numbers of these units in circulation. With the units listed online for in the region of $1800, even with bulk discounts liberally applied this represents over $4B worth of additional mining equipment used to secure the Bitcoin network. Of course, this crude calculation doesn’t take into account alternative sources of hashpower from different ASIC setups such as the all-in-one BlockBox shipping container units from Bitfury. These units utilise Bitfury’s proprietary ASIC
