After the Bitcoin reward halving, many legacy mining devices (rigs) are not profitable for BTC. Some legacy rigs may be seeing their inevitable end of life. However, newer devices continue to provide profitable mining operations even at conservative electricity rates.
Reward halving pushing mining rigs out of service
The reward halving on May 11th pushed the BTC block reward from 12.5 BTC per block to 6.25. With blocks of transactions in the BTC network closing on average of every 15 minutes, the recent halving pushed the daily average of BTC rewarded to miners from 1,200 to 600.
With this change, many rigs (devices that ‘mine’ for Bitcoin by trying to solve for the block algorithm while simultaneously validating transactions in the current block) are now consuming more electricity than the monetary value of bitcoin generated.
The average cost of electricity in the U.S. is 13.3 cents per kWh. At a conservative rate of $0.12 per kWh, many rigs are no longer profitable. Most notably, the Antminer S17 series, running at standard levels, is no longer profitable at average U.S. electricity costs. Additionally, all of the Baikal models outside of the Giant A900 and PandaMiners are no longer in the profitability range.
List of top 10 ‘closest to profitable’ rigs with price of $0.12 per kWh from https://www.asicminervalue.com/
While this paints a stark picture for miners in the U.S, it is important to note that electricity prices vary significantly within the country. Additionally, many other countries have lower prices, such as Sweden, which has a purported average kWh price of $0.06.
At rates such as in Sweden, many more rigs are ‘in the green’ for profitability. Many legacy miners are still not profitable at low electricity rates. The ubiquitous S9 series is still running at -$0.32 to -$0.48 per day with scandinavian rates.
Will legacy come back to profitability?
Average rates are not entirely representative of the mining market, and many larger scale miners are utilizing lower rates for their operations. China has industrial electricity rates that allow factories to gain a competitive vantage over other markets. There are certainly some S9 rigs in the mix of that vantage that are still in operation.
With relative stability over a $9,000 market BTC value, the S9 is seeing a resurgence. This week, S9 rigs may have accounted for over 20% of the network in the past week.
Legacy rigs may be seeing a comeback into the market if prices continue rising above the psychological 10% level. However, addition of even more elite machines into the market will rise the hashrate, causing a rise in mining difficulty, which will push out legacy machines.
The hype for new machines is real and is showing potential to disrupt. The S19 is sold out and has yet to be released. This, along with competitor offerings such as MicroBT’s new rigs with over 100 TH/s may lead to an exponential growth in the BTC mining network. This would reduce legacy rigs’ chances at a resurgence into mining power and may force many miners to upgrade to remain profitable.
Written by Nate Christenson, hashpowah editor and eCommerce Product Manager