Efficiency Is King In The Bitcoin Mining Industry

Photo by Michael Förtsch on Unsplash

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As Bitcoin (BTC) and Ethereum (ETH) continue to dominate headlines, the cryptocurrency mining industry has reportedly flourished in the U.S. and Canada. 

Once the domain of Chinese enterprises, the West has supplanted China as the global mining center after the Chinese government cracked down on the industry. North American miners now account for over half of the total global Bitcoin hashrate — a measure of mining power.

Companies like Marathon Digital Holdings Inc. MARA, Riot Blockchain Inc. RIOT, Hut 8 Mining Corp. HUT and their competitors have built out massive mining operations to facilitate this shift. These facilities house thousands of advanced processing units called ASICs, or Application Specific Integrated Circuits. The machines are purpose-built to solve the advanced cryptography at the core of blockchain technology. And they are incredibly power-hungry.

One advanced ASIC, the Antminer S19, operates at 3,000 watts. For reference, that’s the equivalent of running three clothes dryers or 10 food blenders. But unlike a blender or a dryer, ASICs are designed to run continuously. Running one for an entire year uses roughly twice as much electricity as the average American household uses in the same period.

Power is one of the most important considerations in a mining operation’s profitability. Miners are always looking to locate their operations in areas where they can access dirt-cheap electricity. The lower the electricity cost, the higher the profit margins.

Just as important as the cost of the electricity is the efficiency of the machine. It’s better (but probably less fun) to pay $5 for a gallon of gas if your car gets 100 miles to the gallon than to pay $1 a gallon to fill up your Bugatti Chiron that gets just 11 miles per gallon. 

ASICs’ efficiency can be measured in hash rate per watt. Modern Bitcoin ASICs, like the S19, have an efficiency of roughly 31.67 TH/kW. An S9, released roughly four years before the S19, has an efficiency of about 10.2 TH/kW. Because of the increase in the difficulty of mining Bitcoin (BTC),  the increased competition and difficult adjustments to the network, having the latest technology is crucial. As machines age, there comes a point at which they are not efficient enough to be profitable.

This means companies that are able to maintain a fleet of the newest ASICs may end up having a major leg up in the industry. As a newer player in the space — OLB Group Inc. OLB — reports that it operates the S19j Pro, the most efficient Bitcoin miner on the market, delivering 33.89 TH/kW. The company states that installing just the latest efficient cryptocurrency mining machines enables it to get the most out of every cent spent on electricity and is an advantage over those still operating previous generations of mining equipment.

This post contains sponsored advertising content. This content is for informational purposes only and is not intended to be investing advice.