The latest hash rate disclosure reveals that Bitmain is deploying significantly less hash power on the Bitcoin and Bitcoin Cash networks.
- Bitmain reports 88% drop from April to May in the hash rate deployed on the Bitcoin and Bitcoin Cash networks
- Bitmain may be strategically scaling down proprietary mining operations to focus on other sources of revenue
- Bitmain controls a significantly lower share of hash rate than this time last year
It was speculated earlier in the year that Bitmain was preparing to scale up their proprietary mining operations. Their latest hash rate report demonstrates that Bitmain is after going in the opposite direction with 88% less hash rate deployed on the Bitcoin and Bitcoin Cash networks.
Bitmain releases its hash rate disclosure each month as part of their policy to remain transparent. The latest hash rate disclosure released on May 7th reported 237 PH/s deployed on the Bitcoin and Bitcoin Cash networks, an 88% drop from the 2,072 PH/s reported in April.
How Important Is Bitmain’s Proprietary Mining?
Bitmain’s proprietary mining operations have historically represented only a fraction of Bitmain’s entire revenue. The lion’s share of revenue is generated from hardware sales.
Bitmain has recently released their next generation of bitcoin mining hardware, the Antminer S17 and T17.
Other services are also generating revenue for Bitmain. Bitmain recently launched a cloud mining service BitDeer whose mining contracts are currently sold out.
Another key source of revenue for Bitmain is their control of leading mining pools AntPool and BTC.com. Bitmain is also an investor in ViaBTC. According to research from TokenInsight, these pools accounted for 36% of the hash rate in Q1 2019.
The share of hash rate controlled by Bitmain stayed at 36% for April according to data from Diar. This is down from 51% in April of last year.
Seven day moving average of hash rate
Given the reported decline in hash rate combined with the increase in the levels hash rate observed across the entire Bitcoin network, the percentage of blocks mined by Bitmain would be expected to drastically decrease. Bitmain has a smaller share of a larger market in terms of hash rate but recent estimates from blockchain explorers demonstrate that the hash rate controlled by Bitmain remains above 30%.
The above pie chart illustrates the estimated hash rate distribution in the Bitcoin network over the past 24 hours on the 15th of May 2019. AntPool, BTC.com, and ViaBTC were estimated to have mined 31.1% of blocks over this timeframe.
Is Bitmain strategically scaling down?
Bitmain Revenue Percentage Sourced From Proprietary Mining, Source: Bitmex Research
If Bitmain is strategically scaling back proprietary mining operations to focus on other sources of revenue, it would not be the first time. The share of revenue sourced from proprietary mining was previously lowered, decreasing from over 18% in 2016 to less than 4% in the Q1 2018.
In hindsight, the decision to scale back mining operations over the past few years was a prudent one. It demonstrated a focus from Bitmain on transitioning their business away from an increasingly competitive mining environment to further up the supply chain in supplying mining equipment to a growing industry.