Sichuan Research Cryptocurrency Mining Industry, Bitcoin Miners’ Income Plummeted in May

Bitcoin miner revenue in May was $1.466 billion, down 14.09% YoY. However, thanks to rising on-chain fees, ethereum miners earned $2.323 billion in revenue, up 45.86% YoY.

Sichuan Research Cryptocurrency Mining Industry, Bitcoin Miners' Income Plummeted in May

By Wang Yongfei Ran Xuedong Beijing

The Sichuan Regulatory Office of the National Energy Administration held a research symposium on “virtual currencies” on June 2, 2021, which became the focus of attention in the crypto industry. As of this writing, the official results of the symposium have not been issued, and the “Sword of Damocles” of crypto mining is still hanging overhead.

The cryptocurrency market is currently in a shaky cross-section against the backdrop of an uncertain global crypto environment, and since May, the country has intensively introduced policies to crack down on crypto mining, which has caused bitcoin prices to plummet and arithmetic power to fall, making miners’ income significantly affected.

Crypto Policy Changes in Sichuan Still Unclear

In recent years, Xinjiang and Sichuan, as the largest gathering places of global crypto mining, once occupied more than 80% of the global mining arithmetic. According to previous years, when June comes, most of the crypto mining farms in Xinjiang move to Sichuan, making Sichuan the largest concentration of computing power in the world. In 2021, however, crypto mines had to take into account the policy requirements, and Sichuan is no longer the main relocation site, with mines in the deep mountains on the move. The Huaxia Times previously reported that many mining farms are preparing to actively relocate to countries such as Kazakhstan, Canada and even the volatile Iran.

In this context, the symposium held in Sichuan is naturally of great interest, and Sichuan’s attitude concerns whether there will be a historic shift in bitcoin computing power. It is reported that the symposium, the State Grid Sichuan Electric Power Company, Sichuan Energy Investment Group reported their respective supply area virtual currency “mining” and related recommendations, shutdown virtual currency “mining” on the impact of this year’s Sichuan abandoned hydropower analysis. Sichuan Electricity Trading Center reported on the participation of big data enterprises in market transactions and related suggestions in the demonstration area of hydropower consumption; the power sales company reported on the participation of big data enterprises in market transactions and related suggestions.

Relevant people said to this reporter: “this symposium, the relevant departments reported the situation, decision makers and participants to understand the current situation of hydropower use, but for the further implementation of the follow-up policy has not yet a certain tendency and specific content.”

Industry insiders to this reporter’s analysis, Sichuan currently has more than 600 medium and large mining farms, mining machines more than 2,000 units accounted for the majority. It is estimated that a year a 20,000 mining machine scale mine to pay more than 100 million yuan related fees, more than 20,000 mining machine mine is not less. Once shut down, in the period of abundant water, Sichuan, these green energy conversion of electricity, all will become abandoned hydropower.

The consumption of large amounts of electricity, resulting in power outages in some areas, has also become a point of much criticism of bitcoin mining. According to the Sichuan power trading department report, the electricity consumption for bitcoin mining is expected to reach 11.3 billion kWh in 2021. During the dry season, the pressure is also quite high.

The above-mentioned industry insiders said: “After this crackdown, bitcoin hash rate dispersion out of China is the general trend, some of the mining farms withdrawn from Sichuan, Xinjiang, Yunnan, some of the mining farms left behind is also more powerful, the number of this part of the mine will not cause a great impact on electricity and carbon neutral, but also in the abundant water period to consume waste hydropower, is the best result. “

Bitcoin miners’ income plummets

Hit by the plunge in bitcoin prices in May, bitcoin miners have seen their income plummet. Data from OKLink, the Ouko cloud chain, shows that bitcoin miners earned $1.466 billion in May, down 14.09% from a year earlier. But thanks to rising on-chain fees, ethereum miners earned $2.323 billion in revenue, up 45.86% sequentially.

BTC.com data, since May 13, the network-wide average arithmetic power of the Bitcoin network dropped from 179.25 EH/s to 150.48 EH/s; the network-wide difficulty dropped from 25.05 T to 21.05 T, a drop of more than 15%; according to estimates, the next difficulty is expected to drop to 18.49 T, a further drop of 12.14%. Our reporter noticed that on June 4, the arithmetic power of many major mining pools was declining; Antpool dropped 6.71%, 1THash dropped 3.31%, and BTC.TOP dropped by more than 15%.

Veteran miner Li Yun told this reporter that the profitability of bitcoin mining is complex and is highly correlated with the price of bitcoin, mining difficulty, total network arithmetic power and transaction fees. The main components of a miner’s income are fees and block rewards, and network power depends on whether the miner is running. Overall, the price of bitcoin is inversely correlated with mining power. The difficulty of mining has been declining in tandem with the decline in arithmetic power. since bitcoin halved in May 2020, bitcoin miners appear to have compensated for the halving of bitcoin volume through price as prices have risen since 2021.

“The main reason for the more than 14% decrease in bitcoin miners’ revenue in May is still caused by the plunge in bitcoin prices, which previously reached near $69,000, and miners are already earning far more than they did before the halving on May 21, 2020. With the number of bitcoin mines halved and the price more than 7 times, it’s safe to say that bitcoin miners have made a fortune this year. Even if the price plunges, it’s only a reduction in revenue, and profitability is still very high.” Li Yun explained to this reporter.

Li Yun said, “In May, due to factors such as mine relocation, power restrictions, as well as the postponement of the rainy season in the southwest and policy crackdowns, the arithmetic power once plummeted and many mining sites suspended their operations or limited their operations, which had a big impact on the income of miners in China. My miner has barely been on all day since mid-May. It is usually ten in the morning and seven at night, and the miner has become a working person. Sichuan policy is not clear yet, and there may be a lot of variables in June. If the bitcoin price is still falling, it is predictable that miners’ income will continue to decrease.”

It is understood that miners’ income fluctuations and coin price fluctuations are basically the same. for every block mined in 2019, the system will then reward miners with 12.5 bitcoins. The total revenue of global miners in 2019 is estimated to be more than $5.2 billion, and the highest month of 2019 was July, when the total revenue of global miners was also only $657 million, and July was also the highest price month of the year. The lowest month had a total global miner revenue of only $196 million. And the higher April global miner revenue since 2021, after mining rewards were cut in half, also reached $1.68 billion. So the halving of bitcoin mining rewards is also a mixed blessing for miners.

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