MinerMovements #6

Whatsminer M30S Officially Launches While Chinese Equities Approach Record Highs

Happy Monday Miners,

To kick off the sixth release of MinerMovements, we have some questions for all subscribers. Is there a specific part of the Bitcoin mining industry which you believe needs to be explored further? Is there a question niggling at you about Bitcoin mining and you can’t find the answer? Is there some data which you believe would enhance our understanding of the Bitcoin mining industry? Let us know by tweeting @minerupdate.

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Coronavirus Update

In our last newsletter release, we explored the impact the Coronavirus is having on the equity markets and crypto mining. Production at Chinese manufacturies was halted resulting in high demand for new mining rigs not being filled.

Difficulty levels remained relatively unchanged as hash rate from new mining rigs was subject to delivery delays. The situation is roughly the same with BTC.com estimating that the Bitcoin mining difficulty level will drop by roughly 0.91% tomorrow. This highlights that there has likely been little change in hash rate since the last MinerMovements release.

However, huge changes have been observed in the equity markets…

Here’s the chart of the CSI300 index and Shanghai Composite included in our last MinerMovements release.

Here is the CSI300 index as of this morning 10:15 GMT+8.

The price returned within 1% of all-time highs. The Shanghai Composite increased to within roughly 2% of its high formed before the Coronavirus.

What has the catalyst been for the recovery in the Chinese markets? Does it mean that Chinese industry is not going to be impacted by the Coronavirus to the extent which was initially anticipated?

Not necessarily. The Chinese central bank (PBOC) has intervened with a long, long list of stimulatory measures as detailed in a Reuters article.

Here are just a few examples:

  • The PBOC injected 1.7 trillion yuan (~$242 billion) into the Chinese economy through open market operations

  • Banks in Shanghai have issued 1.31 billion yuan (~$186 million) to 48 firms central to the Shanghai economy

  • The one-year loan prime rate, the benchmark lending gauge of the Chinese economy, was lowered by ten basis points to 4.05%

All these measures have certainly bolstered Chinese equity prices. But with Chinese firms facing questionable Q1 results, these measures may be more of a short-term fix.

The implications for the crypto mining industry are limited. Lower benchmark interest rates will allow businesses to access cheaper credit but the main factor for the health of crypto mining is the return of Bitcoin ASIC manufacturers.

MicroBT has already resumed operations according to a source from ValarHash. This report is corroborated by the official launch of the Whatsminer M30 mining rig series.

The first batch sold out within 24 hours with expected shipping on the 20th of March. The second batch is currently on sale with expected shipping on the 20th of April.

The attractiveness of the second batch of Whatsminer M30S is significantly lower than the first batch due to the month difference in shipping. Miners receiving second batch Whatminer M30S rigs will observe significantly lower returns than those receiving the first batch as the difficulty level will have adjusted higher to account for new hash rate on the market.


Miner Insights

Layer1 launches Bitcoin mining containers in West Texas - Bitcoin mining startup Layer1 launched several Bitcoin mining containers in West Texas. Each container has an energy draw of 2.5 MW. Layer1 plans to scale up to 100 MW over the next few months and has ambitions to capture 30% of the hash rate by the end of 2021. It would currently require over 500,000 Antminer S17+ mining rigs to capture 30% of the Bitcoin hash rate.

North Korea scale-up Monero mining activity - Research by threat intelligence firm Recorded Future claims that North Korea has scaled its Monero mining operations tenfold since 2017. Crypto mining is one of several methods which North Korea uses to generate revenue and circumvent sanctions.

How does the 2020 Bitcoin price increase impact miners? - Bitcoin mining margins have widened as a result of Bitcoin price appreciation in 2020. While widening margins sparks increased demand for mining rigs, this demand is currently not being filled as the Coronavirus forced Chinese ASIC manufacturers to delay production. Bitcoin miners are benefitting from increased prices with cost of production remaining relatively unchanged as suppliers can’t fulfil the demand for new hash rate.

Quick Miner Movements

Best of the Rest

CoinMetrics Cryptoasset Valuation Research Primer Part 1 - Frameworks for valuing crypto assets remain rudimentary. One valuation method which has received increasing amounts of attention over the past year is the impact of the Bitcoin mining cost of production on market prices. CoinMetrics grounds cost of production models in classical economics by referencing Adam Smith’s introduction to the concept that market price gravitates towards the cost of producing a commodity. CoinMetrics detail cryptocurrency research in this field since 2015. The latest research exploring this topic was published by Charles Edwards and models Bitcoin’s value as a function of energy input.

Charles Edwards forecasts Bitcoin reaching $100k within five years - The two inputs into Edwards energy-value model are hash rate and mining rig efficiency. Edwards models estimates the growth rate in these variables over the next five years. Growth in these input variables has declined in recent years and Edwards anticipates this trend of declining growth to continue. Given the input figures, Edwards forecasts price to reach $100k per Bitcoin within five years.

Upcoming Mining Events

Bitcoin 2020 - Bitcoin 2020 takes place from the 27th to the 28th of March in San Francisco. MinerUpdate is an official media partner for the event and will be in attendance along with several other leading Bitcoin mining companies. For mining-related media enquiries at Bitcoin 2020, email hi@minerupdate.com. MinerUpdate readers can get a 20% discount on tickets by using the promotion code MINER20.

About MinerUpdate.com

MinerUpdate.com is the leading crypto-mining publication. Our aim is to bridge the gap between the East to the West in mining while delivering to our readers the latest insights and developments in the industry. Our publication is ad-free, bias-free, with no conflict of interest when it comes to delivering high-quality content. In October 2019, MinerUpdate hosted MinerSummit, the first English crypto mining event in China.

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Did we miss any important mining movements? Let us know by tweeting @MinerUpdate or emailing hi@minerupdate.com.