Bitcoin miners earned $1.3 billion in February alone, Mining Difficulty Reduced even at over $50k
Well, the freight train keeps gathering momentum.
Bitcoin is arguably the financial story of the year. This asset is eclipsing every artificial ceiling in its march towards financial greatness. Even the most ardent Bitcoin believers must be pinching themselves at the turnaround since March 2020.
Picture this: Bitcoin closed at $28,992 in December, $33,141 for January, and $45,240 in February. You will be hard-pressed to find any other asset with even half the gains BTC has made. At press time, Bitcoin is edging close to $60,000, changing hands at over $58,000.
Before this rally, many were wondering whether the $20k mark, which the 2017 rally just fell short of, was achievable.
Now, that seems like a bygone era, with all the focus being on the next big milestone.
Bitcoin Miners Benefit Immensely from The Surge
Lots of stakeholders are thrilled with the record-shattering trends. None more than Bitcoin miners. As a collective, they made over $1.3 billion in revenue in February. This mark is a 26 percent appreciation for revenue figures for January.
Bitcoin miners are realizing returns not seen since 2017. To put the figures in context, one has to adjust for the fact that Bitcoin rewards halved in 2020. The surge in revenue is because prices have literally quadrupled in the intervening time frame.
Similarly, Bitcoin hype is at record highs. Traders are transacting in droves to take advantage of the high market. This trend means that miners are also earning remarkable transaction fees to go along.
The transaction fees formed just over 13 percent of the total revenue last month. The actual figure was close to $200 million. This historic return was good news for miners. Transaction fees will remain a vital source of revenue for miners even when mining rewards halve towards zero.
Bitcoin Mining Difficulty Fell
The Bitcoin price went up in the latter parts of last year. Many analysts expected difficulty to closely track prices.
On the face of it, the difficulty has gone up, with figures that are historic highs. That said, the remarkable doubling of Bitcoin prices in 2021 has not affected prices to the extent some expected.
Mining difficulty is a relative measure of how easy it is to mine one block of Bitcoin transactions. The difficulty has a close relation to the network’s total hash rate. At press time, the difficulty was about 21.48 trillion Terahashes a second. This mark is a slight decline from highs of 21.7 trillion in late February.
This trend shows an extraordinary development. Miners are enjoying the highest return levels in years. Those with elite mining equipment are leading the way. This reality is more pertinent now that there is a shortage of mining equipment.
In anticipation of the surge, institutional mining companies ordered equipment last year to be delivered through 2021. VBit also had this foresight and ordered equipment from Bitmain, the world’s leading mining rig manufacturer.
As miners rake in record returns, many are struggling to source the elite equipment. Companies like Riot Blockchain order tens of millions worth of mining equipment at once. Logically, Bitmain will prioritize such large orders over smaller orders from individual miners.
Bitcoin Enthusiasm Is Off the Charts
In February, Bitcoin crossed $1 trillion in market capitalization for the first time. This mark is significant because it is something you would only associate with powerhouse tech corporations like Apple and Amazon.
It also puts to shame people who called Bitcoin an “economic sideshow” and a poor hedge against a fall in stock prices. Bitcoin indeed began as a fringe asset. Nonetheless, true believers always envisioned this monumental surge to global prominence.
These gains no longer seem like a passing fad. Skeptics have always raised the ceiling slightly higher for each milestone that Bitcoin breaks. Another similar surge would take the asset towards $100,000 by the end of the year.
The big difference this time is the appetite of institutional buyers. Leading corporations like Tesla and PayPal have jumped on the crypto train in consequential ways. More companies are likely to invest in Bitcoin as a reserve asset. It is the best performing major asset over the last decade.
Bitcoin will continue to exhibit a level of volatility. However, the general trajectory is in one direction. Numbers don’t lie. At a time when the government is printing the life out of major currencies, the secure and finite store of value is well-poised to play a significant role as a hedge asset.
A Dynamic Asset
For Bitcoin’s critics, the chickens are coming home to roost.
There are times when their glee and criticism seemed on point. This asset has shrugged the tumultuous time to march upwards. Some will continue to point out volatility and market hype as areas of concern. Like every controversial subject, it is impossible to win over everyone.
Regardless, Bitcoin’s growth in stature is unmistakable. It is now the subject of discussions in corporate boardrooms. Ten years ago, only nerds and a few bold people cared for this asset.
Bitcoin has a dynamic aspect. It is not purely a speculative asset. With the rise of decentralized finance, there are Wrapped Bitcoins (wBTC). These tokens provide collateral for lending platforms. Similarly, companies like Tesla are holding Bitcoin as a reserve asset.
Giving Bitcoin a narrow definition is limiting. Its function and meaning vary with the holder. Miners are happy with these developments because it means that their activities are more rewarding.
The surge in prices has triggered an arms race of sorts for mining equipment. Mining Bitcoin is the only direct way to get new Bitcoin without purchasing. Institutional purchasers like Riot Blockchain are ramping up operations to make the most of this window of opportunity.
A shortage in mining equipment, coupled with stable mining difficulty has some people feeling nostalgic, and going back to older mining equipment.
Some are even sleeker. Older mining equipment becomes redundant when newer equipment comes to town. The sudden surge in prices meant that some older equipment became viable. These dealers are advertising on sites like eBay under this guise.
Purchase Elite Bitcoin Mining Equipment from VBit
The mining difficulty is positive for miners, for now. Soon as the hash rate adjusts the difficulty will go upwards. Notably, tens of thousands of new rigs will enter the market this year. This fact will price out older rigs and leave the S17s and S19s in good shape.
Accordingly, it is wise to purchase new equipment. VBit Mining is a professional equipment reseller with a direct line to Bitmain and provides hosting services for Bitcoin miners. This association allows us to source the latest rigs even when there is a market crunch.
VBit mining packages allow users to mine Bitcoin competitively. Besides, we provide hosting services for mining equipment. Mining consumes power and produces much heat. Owing to these circumstances, we have located our data centers in areas with natural cooling and cheap renewable electricity. These two are very consequential in the viability of any Bitcoin mining operation.
This period has been very positive for Bitcoin miners. Those wishing to get started can learn much from our website. The VBit blog provides valuable information for any prospective Bitcoin miner.