Overview

Mining, as an upstream link in the digital asset industry chain, is entering an unprecedented white-hot stage. With the expansion of the digital asset ecosystem, the rise in digital currency prices, and the reduction in electricity costs for mining due to cheap hydropower brought by the flood season, the profitability of the mining industry has been significantly improved.

As the payback period of mining machines is greatly shortened and the profit effect is getting better and better, potential capital will be invested in mining machines, which will further increase the difficulty of mining. The concentration of computing power has become a trend in the mining industry. The mining industry is moving towards scale and entering the era of large mines and cloud mining.

Report Content

Industry Overview

Mining is the process of consuming computing resources to process transactions, ensure network security, and keep everyone in the network synchronized. Mining is the process in which nodes participating in bookkeeping in the blockchain network compete for the right to record books. Through the high-difficulty hash operation, the neutrality and fairness of the network are guaranteed. This mining mechanism makes it difficult to revoke past transactions and easy to backtrack transactions, thus ensuring the immutability of the blockchain. In return, miners are compensated with reward tokens generated by each block and transaction fees for block-related transactions.

The Bitcoin ecosystem is dominated by application-specific chips (ASICs), while for most other cryptocurrencies, it’s graphics processing or programmable gate arrays.

Factors affecting mining revenue

Mining revenue is mainly affected by the total network computing power, currency prices, mining machine prices and electricity prices.

According to the Standard Consensus BTC Mining Revenue Index, the current BTC revenue per ton is $0.27. Without considering the mining machine and electricity costs, the average level of market revenue per ton.

Comparison of mining of various currencies

As the concentration of computing power has become a trend in the mining industry, mining pools have become an important part of the entire mining industry chain and have an influence on mining that cannot be underestimated. Mining pools with a higher proportion of computing power will also become the first choice of miners, which will also lead to more and more concentration of computing power at the top.

Comparison of BTC mining pool hashrate

At present, mining rewards mainly come from block generation rewards, such as BTC, LTC and other digital currencies. In the process of block generation, the block reward will be halved. If the block reward is halved while the currency price remains unchanged, it will have a huge impact on mining income. Therefore, investors in the mining industry need to pay close attention to the halving time of the corresponding currency.

According to the standard consensus BTC production halving countdown data, there are 281 days left until the next BTC production halving, which is expected to occur on May 8, 2020.

Mining risk analysis

• Policy risks: This type of risk mainly targets the industry risks of the entire digital currency as a whole, as well as some administrative penalties or restrictions on mining plants.
• Risk of currency price fluctuations: Currency price is an important factor affecting mining income. The decline of currency price will greatly affect mining income.
• Risk of computing power fluctuations: The growth of computing power will increase the difficulty of mining for miners, thereby reducing the profit per unit of computing power.

• Mining machine damage and new product replacement: Usually a mining machine has a lifespan of 2 years, but after a mid-life failure or a new product replacement, the mining efficiency of the old mining machine will be greatly reduced, which will inevitably affect mining revenue.

In summary, the mining industry is gradually entering a period of standardization and centralization, with risks and opportunities coexisting. The entire industry is changing rapidly, and new factors are constantly influencing the development of the mining industry. With the overall rise in digital asset prices, the profitability of the mining industry has increased significantly, and the attraction to capital will become stronger and stronger, and more capital will be invested in this industry.