TokenInsight Publish Q2 Mining Report Highlighting Hardware Performance

TokenInsight release their Q2 analysis of the mining industry. The report details the performance of hardware currently on the market for mining Bitcoin and establishes the relationship between the revenue generation of such hardware with network metrics such as difficulty and hash rate.

Quick take;

• Through a Monte Carlo analysis, TokenInsight models Bitcoin price to be in the range of $17,077 to $23,276 on the 14th of August 2020
• TokenInsight anticipates that the Bitcoin difficulty level will be between 14.74 to 17.14 trillion at year-end
• Hardware with greater levels of power efficiency demonstrate a greater ability to make a return on investment in the face of prospective difficulty increases
• Hardware with higher hash rate is less impacted by changes in electricity rate when compared with lower hash rate hardware 

Beijing-based research firm TokenInsight has published its Q2 mining report. The mining report analysed the profitability of current mining hardware and assessed the performance prospects of such hardware for future difficulty levels. In addition to this, the report modelled prospective changes in prices and difficulty levels while also reporting on wider trends in the mining industry.

Price increases resulted in highly profitable conditions for miners during Q2. Mining hardware was strongly in demand and despite increases in the price of hardware, supply shortages were observed. 

TokenInsight anticipates further increases in Bitcoin price and simulated through a Monte Carlo analysis that the price will be between $17,077 and $23,276 on the 14th of August 2020. This range is noted to have a 95% confidence interval and does not account for news developments which may impact price.

Most Profitable Mining Hardware Under Different Difficulty Levels?

Consistent with their Q1 mining report, TokenInsight found that the mining hardware on the verge of being removed from the market had the lowest payback period at static difficulty levels due to the low cost of acquiring such hardware. Under such conditions, the Antminer S9k had the lowest payback period when the electricity rate was approximately $0.05 per kWh. 

However, under conditions where the difficulty level increases, hardware with better power efficiency showed a greater ability to make a return on investment. The Whatsminer M21S, Innosilicon T3 43T, and the Whatsminer M20S are the only hardware currently on the market which managed to achieve a return on initial investment if the difficulty level persists to increase 5% at each adjustment from when the study period started on August 7th. This indicates these models of hardware are currently the most robust in the face of significant increases in difficulty. Of the three models, the Innosilicon T3 43T was noted by TokenInsight to be the optimal choice of all current hardware models:

“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”

TokenInsight Q2 Mining Report

The phenomenon of more power-efficient hardware outperforming in the event of prospective difficulty increases is being in secondary hardware market prices. Comparing the prices of the Antminer S9 which has a poor power efficiency of 85 J/Th with the Antminer S17, which has an efficiency of 45 J/Th, we can see strong evidence that there is strong selling pressure in the poor power efficiency hardware markets while hardware with the greatest power efficiency are highly in demand.  Matt D’Souza (@mjdsouza2), CEO of North American hardware broker Blockware Solutions, provided MinerUpdate with the following price data.

While Antminer S9 hardware had been increasing in price up until early July up to a price point of $550, it has recently been rapidly losing value. Over the past two months, the price of Antminer S9s lost 42% of their value. This is consistent with reports MinerUpdate received that mining farms are offloading Antminer S9s to any buyers they can secure. However, the Antminer S17 has appreciated on the secondary market to an even greater extent that the price of Bitcoin itself. The Antminer S17 doubled in price from May to September while bitcoin appreciated 94% over this timeframe.

By year-end, TokenInsight estimates that the Bitcoin difficulty level will continue to increase and finish 2019 within the range of 14.74 to 17.14 trillion. Such an event will put further pressure on hardware with poor power efficiency as the Bitcoin mining environment becomes increasingly competitive.

TokenInsight Establish Elasticity of Mining Revenue

TokenInsight also explored the elasticity of miner revenue under changes in electricity for different hardware models. The elasticity of revenue for changes in electricity is the degree to which revenue changes for a given change in electricity. If the electricity cost rises 10% for both hardware model A and B but hardware model B undergoes a greater percentage decrease in revenue generation, it can be said that hardware model B is more elastic than hardware model A.

As would be expected, the hardware with lower levels of hash rate exhibited greater elasticity when compared with hardware with higher levels of hash rate. When it comes to hardware, TokenInsight’s research paints a clear picture. Hardware with poor power efficiency and/or low hash rates have greater risk of not showing a return on investment in the face of rising electricity rates or difficulty level.