Bitcoin Mining Hardware: What the Halving Event Means for Miners

May 12, 2020 - Crypto News, Expert Commentary

Bitcoin Halving Mining Equipment

Faster, higher, stronger.

You would probably recognize this as the motto for the Olympic Games. 

The underlying principle of competition and better condition, however, translates to many other aspects of life.  Applying it to Bitcoin mining may seem like a stretch at first, but the recent halving event has illustrated this concept.

Bitcoin mining is a very competitive exercise. As Bitcoin mining difficulty increased with time, the sophistication of equipment needed to mine Bitcoin profitably also went up. Miners who have the latest and best mining equipment in the market have the edge.

Why Halving Is Devastating For Old Mining Rigs

Bitcoin halving is a seismic event every time it happens. The reduction of block rewards in half is significant given the value of each Bitcoin. The people most directly impacted by this development are Bitcoin miners. Losing almost half their revenue, with the power-intensive nature of Bitcoin mining, is a big shift.

To make the same amount of Bitcoin as before, they have to run double the number of computations. Even though transaction fees are considerably higher after halving, they do little to seal the hole left in the pockets of Bitcoin miners.

In the moments after the halving, up to 30 percent of miners began to close shop as their businesses became unprofitable. Miners operating old rigs such as the Bitmain S9 miner cannot continue to operate in the post-halving environment. The older machines have become inefficient and have to shut down.

The only hope for such miners was that Bitcoin prices go up drastically after the halving event. It is not enough that prices just rise, but rise high enough to bring them back to the realm of profitability. Anything short of that would simply fast-track their demise.

Mining is a game of survival.

As is the Darwinian law, the fittest survive. Companies that fail to find the most efficient ways to mine end up on the losing side. In the weeks leading up to the halving event, Bitcoin prices went up and old miners had a small window of profitability. However, soon after block rewards were cut down in half, they could no longer be viable. 

What Kind Of Miner Survives This Eventuality?

Just like every other technological innovation, Bitcoin mining rigs have improved with time to improve efficiency. In the mining sector, this improvement is extremely important because mining gets more competitive and less rewarding as the years go by.

Initially, Bitcoin mining was viable using your home PC. Those days of low mining difficulty and a block reward of 50 BTC now seem like a bygone era. Nowadays, the only way to participate in 

Bitcoin mining is through advanced mining equipment: The ASIC mining rigs. 

ASIC rigs are tailor-made for Bitcoin mining and their introduction into the market dealt a death blow to PC and GPU mining.  Accordingly, the Bitcoin hash rate has gone up exponentially over the years even going past the 120 exahash per second mark 

And not just any ASIC rigs, the first ones in the market are the ones being forced out of business.  ASIC mining utilizes chips in the integrated circuits. With time, the trick is to make smaller chips, so that you can fit more chips into a miner.

Currently, the smallest available chip is a 7 nm (nanometer) chip by Bitmain in their Antminer s17+ miner. Bitmain also doubles up as the most prominent ASIC manufacturer in the world.

Parameters That Describe Mining Equipment

In a nutshell, the three parameters that distinguish elite mining chips are:

  • Power consumption– Bitcoin mining consumes a lot of power. The lower the number of watts your miner consumes, the better.
  • Hash Rate– Hash rate is the power of a miner to make attempts at solving mining math problems. The higher the number of guesses per second, the better.
  • Energy Efficiency– Energy efficiency is a metric that is achieved by dividing power consumption by the hash rate. When mining, you will always incur considerable power consumption. Energy efficiency is a measure of how much hash rate you can get per fixed unit of power.

Bitmain’s S17+ consumes 2680W and has a hash rate of 67-73TH/S. These figures give the S17+ greater energy efficiency than most other mining equipment.  The precise energy efficiency is not easy to calculate because Bitcoin mining difficulty is a constantly changing variable. 

Even then, one can improve their profitability by lowering their power costs. Low power costs mean that you have more wiggle room regardless of energy efficiency because you earn more with the same hash rate. 

Nonetheless, improving hash rate is a goal of mining equipment manufacturers. A lower hash rate is what is spelling doom for older mining equipment in the post-halving mining environment. 

The Role of Bitmain in the Mining Sector

Bitmain is the leading mining chip manufacturer in the world and is responsible for its trademark Antminer series. This company was founded in China in 2013 and is also responsible for two of the leading Bitcoin mining pools in the world BTC.com and Antpool.

Bitmain has a reputation for technical excellence and reliable delivery. It comes as no coincidence that they take the lion share of the mining equipment market. Bitmain has a robust presence in the mining field and it is no surprise that their products constantly earn acclaim from users and technicians alike.

The company is reported to have an S19 series ready for the market. This new miner has a hash rate of 95-110 TH/S, which is a dramatic improvement on the S17+. Accordingly, this upgrade will give Bitmain the edge over competitors like Canaan and Microbt. 

Delivery worldwide is complicated in the midst of the Coronavirus pandemic. This crisis has disrupted supply chains across the world and Bitmain is equally impacted by this problem.  Individual mining operations are particularly impacted because of the logistics of getting new equipment in the middle of a pandemic.

Miners with old equipment are now scrambling to upgrade their mining rigs. With block rewards down, miners need equipment with a high hash rate to remain profitable in the new mining regime. Accordingly, advanced equipment such as the S17 and soon the S19 series are hot cakes in the market.

VBit Technologies Has a Direct Line to Bitmain

It is vital to have alignment with established and trusted hardware manufacturers. This is a fluid and changing field that requires miners to constantly improve to stay ahead of the times. 

Coronavirus has been a double tragedy for miners with old mining equipment. Not only are they no longer profitable after halving but also face the difficult task of procuring and getting advanced equipment delivered to them. This pandemic has affected much of global travel and commerce. This is why many miners have simply opted to shut down operations until they can figure out what to do.

VBit Technologies has the luxury of a direct line to Bitmain and their suppliers. Having this connection to the premier mining manufacturer globally has been useful in our journey but will prove even more useful during this period of shutdowns.

They are dedicated to having the best mining equipment available to their clients. This line to Bitmain is one VBit Technologies cherishes and intends to maximize to clients stay in green. 

Besides, our renewable energy sources mean that we have significantly cheaper power costs compared to other miners. Advanced equipment and low power costs improve our profitability and even in the post halving environment, VBit Technologies has the infrastructure to thrive.

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