How Bitcoin Mining and Hash Rate will evolve in 2021

April 28, 2021 - Expert Commentary, How-To Articles

Bitcoin Hashrate

The Bitcoin network is a fascinating maze. 

Many moving parts work together to make up this unique asset. Bitcoin mining is the backbone of the network. It plays a vital security function. Additionally, it is the means by which new Bitcoins enter into circulation.   

Evidently, Bitcoin mining has got more competitive with time. At inception, the mining difficulty was 1. Today, that mark is over 23 trillion. This infinite rise is a testament to the competitiveness of mining and the evolution of mining equipment.

Only specialized Application Specific Integrated Circuit (ASIC) rigs can mine Bitcoin profitably. This specialization is remarkably different from a decade ago when home PCs could still mine Bitcoin. As the equipment arms race heated up, hardware specialization continued to go higher.

2021 Brought Incredible Profitability for Bitcoin Miners 

This year has been historic for the Bitcoin community. The asset has doubled in value and took the financial world by storm again. 

Bitcoin prices have hit all-time high after all-time high. The current mark of $64,000 is sure to be surpassed soon, even though the market had a noticeable correction in late April. 

These prices have brought a historic boom time for miners. Mining difficulty may have adjusted upwards marginally, but the price hike justifies the extra hustle. Provided Bitcoin prices remain high, most existing mining equipment remains profitable. 

Older Antminer rigs went out of business in droves in March 2020 when Bitcoin prices sank below $4,000. Luckily, prices began to rebound and pushed record highs by the last quarter of 2020. 

The mining economics worked out favorably for existing miners. After the monster rally, miners had all their rigs plugged in and hashing, including their oldest machines. The margins were simply astonishing. Some miners were getting up to 85 percent or more inclusive of mining margins, which is remarkable in an industry with intensive power costs. 

The Bitcoin rally prompted buyers to purchase all the mining equipment in the market. Record profits allowed existing miners to expand operations while institutions are jumping in forcefully.

As the institutional investment shores up prices, regulatory developments may push it even further. The possible approval of a Bitcoin ETF will be massive for the asset. It will give Bitcoin a historic entry into the stock markets. Such regulatory developments make more investors comfortable investing in Bitcoin, pushing prices even higher.

Still, Bitcoin Miners with The Best Equipment Enjoy the Best Output 

Incidentally, the record demand comes from a global shortage in semiconductor chips that power ASICs. Equipment manufacturers have not been able to meet the demand. Companies like Bitmain have their equipment sold out for the year.  

Bitcoin mining hash rate will continue to rise. This metric is a measure of the total power consumption and mining output of the network. There was a noticeable blip last week in the past two weeks due to a major power outage in the Chinese province. However, the equipment will gradually come back to life and push the hash rate above the highs of early April.

Accordingly, this window of profitability may be fleeting for some miners. The hash rate and difficulty will continue to climb as more mining rigs join the queue. For instance, VBit ordered 4,000 S19 mining rigs in December. This equipment has come in gradually through the year, and the last batch will be in by September 2021. 

Suppose a dozen other institutional miners have similar orders in the pipeline. The inevitable bump to the Bitcoin hash rate is coming. Many North American miners will also get their rigs in mid to late 2021.

Miners with older equipment will be the first to feel the pinch. The next ones will be those with high power costs. Accordingly, further rises in hash rate will again render mining from home impossible. 

A smart miner would use the extra profits to plan for the future. Failing to prepare is preparing to fail. The only way to retain a competitive advantage is to have the best possible equipment. 

Bitcoin Mining Efficiency: The Rise of Renewable Energy Mining 

Bitcoin mining gets a lot of stick for its electricity consumption. Estimates place the cumulative consumption to be greater than the whole of Argentina. This high consumption has made Bitcoin the target of environmentally conscious critics. Even Bill Gates said that Bitcoin “(is) not a great climate thing.” 

The criticism is not just in words. China’s government has gone to another level. The local government of Inner Mongolia province had to ban Bitcoin mining because of apparent energy consumption. The Central government sets emission targets that the local authorities have to meet. Miners across the country are wary of more action that could disrupt their activities.

This criticism focuses on Bitcoin’s carbon footprint. The fact that most Bitcoin mining takes place in China, which still relies on coal power heavily, does not help.

What’s the direct answer to this? 

Renewable energy.

There are thousands of underutilized renewable energy sources globally. They range from hydroelectric plants, wind farms, and geothermal sources. 

The major logistical challenge for renewable energy plants is their expensive initial cost. Without government subsidies, it is difficult to invest in these plants, given the cheaper alternatives. 

Additionally, some of these plants are located in remote areas that don’t have immediate demand.  

Bitcoin mining offers a unique solution for these plants. It presents ready demand, and BTC mining farms can be located right next to the renewable sources. Green Bitcoin mining is a match made in heaven. It is literally converting renewable energy into mining. 

Mining farms have to consider renewable sources going forward. The use of cheap renewable energy is the proverbial killing two birds with one stone. 

VBit Mining is a Leader in Green Bitcoin Mining 

Talk is cheap; actions speak louder. VBit Mining has actualized green Bitcoin mining for an efficient operation. We have set up data centers next to renewable power sources. 

These data centers put all our principles into practice. Additionally, VBit Technologies has purchased 3,000 new S19 and S19 Pro from Bitmain in late December 2020, significantly boosting the ecosystem’s fire power. 

Bitcoin mining using elite equipment and green energy is a winning formula. As the mining hash rate continues to rise, the difficulty will reset. The mining difficulty will be a death knell for older equipment and miners with unsustainable power costs. 

Accordingly, we have a team committed to consistently optimizing our operation. Efficiency is the name of the game in Bitcoin mining, a fact that we expertly actualize in all our operations. For instance, we can mine without the worry of high power costs because our data centers have a consistent supply of cheap renewable energy. 

Check out VBit Mining website to learn more about Bitcoin mining and invest with us today!

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