Bitcoin mining is a long-term competition

Bitcoin mining is a long-term competition

Transaction fees have decreased, but miners hold bitcoin and gain a foothold in the energy business and other options to follow orNoti Hash is CriptoNoticias’ Bitcoin mining newsletter. It is published on our website every two weeks, being today, Thursday, February 24, 2021, the fifteenth edition to be published, at block 724,700.


Although Bitcoin mining can be an attractive business, the expectations of those who want to invest in it might not be met as easily as they think.

While in the early years of Bitcoin its users mined even with laptops and desktops, now this activity requires highly specialized equipmentscarcely manufactured and energy intensive.

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On the other hand, the costs of operation and maintenance have increased, so it is no longer enough to receive the bitcoins for rewards and user fees and spend them immediately on the necessary expenses.

As part of this edition of Notice Hash, CriptoNoticias Bitcoin mining newsletter, we include some of the recent information on the evolution of the mining business towards new strategies.

Bitcoin mining narratives change over time

Miners are heavily accumulating bitcoin (BTC), making hold about your income. Despite the fact that their shares as companies fell on the stock market, in January they increased their savings in BTC, we reported.

This saving trend has been present since the end of last year, and now miners hold more than 800 thousand BTC, CriptoNoticias reported with data from the firm Braiins.

Bitcoin mining is a long-term competition
Legend: Miners’ savings reach 814,000 BTC. Source: Brains / Coinmetrics

Miners seem to take a long-term business perspective, by taking out loans collateralized with the bitcoins they hold, and by taking into account that mining equipment is expensive and scarceso it is convenient to get the most out of these during their useful life.

For this reason, mining is no longer an arms race, but one of longevity, although greater efficiency and technological development are undoubtedly required to perform in this activity.

It may be difficult for new players to enter this niche, if we assume that Intel’s new miner is not as efficient as the teams of pioneering manufacturers in this sector.

It is also influenced by the fact, which we report in this medium as well, that at this time undermine Bitcoin is 90% less profitable than a year ago in terms of user fees, because they pay much less to transact today.

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In the following image we can graphically see the fees that users have paid per transaction, where at its highest point in 2021, miners received daily income of around USD 14 million. They currently receive close to USD 500,000 daily.

Bitcoin mining is a long-term competition
Legend: Daily transaction fees accounted for in dollars (USD) from 2021 to 2022. Source: transactionfee.info

Increased hashrate and difficulty of Bitcoin drive change of strategy for miners

Of course, all this is related to the dynamic between the difficulty of mining the Bitcoin network (which is automatically adjusted every two weeks) and the processing power invested in the network (hashrate or hash rate).

As we have explained, there is a correlation between the hashrate and the difficulty, while the variation of the hashrate defines by what percentage the cryptographic difficulty of Bitcoin increases or decreases to be mined.

Bitcoin mining is a long-term competition
Caption: Bitcoin hashrate and difficulty are at all-time highs. Source: Brains.

CriptoNoticias reported in recent days how the hashrate has reached all-time highs, which also led to a record increase in mining difficulty.

However, mining is still a profitable activity, if we take into account that mining 1 BTC is cheaper than buying it, according to the Braiins firm’s Cost To Mine calculator, which we reviewed in CriptoNoticias.

Proof that Bitcoin mining is a long-term competition is the fact that no new mining pools have entered the top 10 with the highest power or hashrate. However, it is striking that “unknown” groups are ranked 7th, according to Braiins, with a power of 17.7 exahashes per second (EH/s)

Bitcoin mining is a long-term competition
Main mining pools according to their processing power or hashrate Source: Braiins

Energy abounds in the world for Bitcoin mining

Another factor that is attracting investors to the mining business is the abundant energy options available around the world.

the billionaire Ricardo Salinas showed interest in developing Bitcoin mining at a geothermal plant in his country, Mexico, a project that could get underway soon.

Similarly, in Russia, where a legal framework to regulate Bitcoin is already being discussed, the government also positively values the use of surplus energy to mine Bitcoin.

In Argentina, a project is already being developed to build a mining farm with photovoltaic solar energy, hand in hand with the company Corporación Cápsula. In general, experts agree that Bitcoin mining can sustain their businesses and at the same time take care of the environment using renewable energies, we review in this medium.

Mining from other networks

Picture of the Week

The San Pedro geothermal plant is managed by Grupo Salinas, and could become the first Bitcoin mining plant based on this type of energy in Mexico.

Bitcoin mining is a long-term competition
Domo de San Pedro geothermal power plant in Mexico. Source: Ricardo Carmona, via Twitter.

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