In 2020, the growth rate of Bitcoin and Ethereum’s entire network computing power is less than the increase of their respective currency prices, and miners may obtain excess profits.
Original title: “Shushuo Mining 2020: The total scale of the two major mining companies is approximately US$7.6 billion, and 8 mining pools are expected to have revenues of over 10 million.”
Written by: Carol
In 2020, the “mining circle” has experienced many major events.
The first is that Bitcoin completed its third production cut. As the price of the currency changed from stable to skyrocketing before and after the production cut, the Bitcoin mining industry also turned crisis into opportunity. The annual revenue was basically the same as that of 2019, with a steady transition. In addition, there are more than ten other tokens such as BCH, BSV, BTG, ETC, DASH, ZEC, XZC (now renamed FIRO), etc., which will also successfully reduce production in 2020.
Secondly, with the full-scale explosion of the Ethereum ecosystem in 2020 and the continuous accumulation of ETH asset premiums, the Ethereum mining industry has also entered a period of rapid development, and together with Bitcoin mining constitute the two main mining markets.
In addition, the well-known mining machine manufacturer Yibang International successfully landed on Nasdaq for the second time after Canaan Zhizhi. Mining machine manufacturers continue to “test the waters” of the traditional capital market.
PAData will comprehensively review the mining industry in 2020 through data analysis of industry fundamentals, blockchain network fundamentals and the revenue performance of major market participants, and restore the true face of the mining circle.
Data review:
The highest estimated annual energy consumption of BTC mining is about 77.78 TWh, which is equivalent to the energy consumption of Chile; the highest estimated annual energy consumption of ETH mining is about 14.64 TWh, which is equivalent to the scale of energy consumption in Tunisia.
The total output scale of BTC mining is approximately US$5.012 billion, and the total output of ETH mining is approximately US$2.690 billion.
The mining difficulty of the Bitcoin network has been adjusted 28 times throughout the year, of which 17 times the difficulty has been increased, the highest single increase is about 14.95%; the annual mining difficulty of Ethereum has been increased by 52.20%, compared with the 5.32% increase in 2019 , This year, the difficulty of ETH mining has been greatly improved.
In 2020, the growth rate of Bitcoin and Ethereum’s entire network computing power is less than the growth rate of their respective currency prices, and miners may obtain excess profits.
In 2020, F2Pool is the mining pool with the highest share of BTC computing power, with an average annual computing power share of about 17.53%. Secondly, the average annual computing power share of Poolin, BTC.com and AntPool also exceeds 10%; the computing power share of ETH mining pools It is relatively stable, and the concentration of computing power is higher. The annual average computing power share of the three major mining pools, SparkPool, Ethermine and F2Pool, has reached 75.51%.
In the BTC mining pool, there are 6 mining pools with estimated service fee income exceeding 10 million U.S. dollars. Among them, the service fee income of F2Pool and Poolin exceeds 20 million U.S. dollars; in the ETH mining pool, the estimated service fee income exceeds 1,000. Ten thousand dollars are only Spark Pool and Ethermine.
The rapid development of customized machines in 2020 is a sign of the gradual maturity of ETH mining, and it is also a development direction of ETH mining in the future. Among the customized machines, Xindong, Panda and Langshen are the more mainstream brands. Among them, Xindong has launched 5 customized mining machines. Panda and Langshen respectively launched 3 customized mining machines. The three together accounted for the market for customized machines. 47.83%.
The total scale of the two major mining markets is approximately US$7.6 billion, and the proportion of handling fees continues to increase
Industry scale is an important component of industry fundamentals, and energy consumption is an indicator that reflects the actual scale of the industry. According to the energy consumption scale estimated by Digiconomist, the annual energy consumption scale of the BTC mining industry is basically stable, with an annual growth rate of approximately 6.37%. The highest estimated energy consumption for the whole year is about 77.78 TWh, which is equivalent to Chile, and the lowest estimated energy consumption is about 56.58 TWh. The estimated energy consumption has a short period of decline after the third reduction in BTC production, until 6 Only gradually recovered at the beginning of the month.
Benefiting from the explosive growth of DeFi, the scale of ETH mining has increased greatly in 2020. The estimated energy consumption of ETH Mining increased from 8.11TWh at the beginning of the year to 14.64TWh at the end of the year, an annual increase of about 80.52%, and a significant increase throughout the year. The highest estimated energy consumption during the year is about 14.64 TWh, which is about 1/5 of the highest estimated energy consumption of the BTC mining industry, which is equivalent to the scale of energy consumption in Tunisia.
The annual changes in the scale of energy consumption are basically consistent with the changes in the output scale of the two major mining companies. According to PAData’s earlier panoramic review, the total output scale of BTC mining in 2020 is about 5.012 billion U.S. dollars, which is 3.78% “shrinked” from 2019, which is basically the same. The total output of ETH mining is about 2.69 billion U.S. dollars. This is a significant increase from 2019.
It is worth noting that in August and September 2020, as DeFi liquidity mining stimulated the increasing user and transaction volume, the monthly output of ETH mining was higher than that of BTC mining. Especially in September, ETH mining The total monthly output of BTC is approximately US$489 million, which is US$162 million more than the total output of BTC mining during the same period, which is equivalent to a 48.98% higher. The peak monthly output of ETH mining is a “silhouette” of the potential of ETH mining in the future.
The output composition of the two major mining companies, BTC and ETH, includes block rewards and transaction fees. From the perspective of the proportions of the two parts, BTC mining is relatively more dependent on block rewards, and ETH mining has relatively high fees Higher proportion.
According to statistics, the total fee of BTC mining in 2020 is approximately US$326 million, an increase of approximately 108.97% compared to 2019, and the distribution of fees for the whole year is divided by the third reduction in production, showing a large difference. After the third production cut (including the day of the production cut), the average daily transaction fee was approximately USD 1,244,500, which is equivalent to about 4.75 times higher than before the production cut. Affected by this, the proportion of transaction fees on the Bitcoin chain in mining revenue has also increased from an average of 2.8% last year to an average of 6.69% this year, an increase of nearly 4 percentage points.
In contrast, the total commission fee of ETH mining in 2020 is about 631 million U.S. dollars, and the annual growth trend is significant, especially in the third quarter, the hot DeFi liquidity mining caused the Ethereum network to become crowded, and the commission fee increased rapidly , The proportion of handling fees in miners’ income also increased from 17.34% at the beginning of the quarter to 30.05% at the end of the quarter. Affected by this, the average proportion of ETH mining fee income in total revenue for the year has also reached 16.06%, which is nearly 10 percentage points higher than the proportion of Bitcoin fee in the same period.
It can be predicted that if the basic situation of the Bitcoin network in 2021 is similar to that in 2020, that is, the computing power of the entire network continues to rise moderately, but the number of transactions and block output are basically stable, then the fee income will also become the main source of improving the marginal profit of the mining industry. Way, the proportion of handling fees in revenue may continue to increase. On the other hand, whether the proportion of the fee income of the Ethereum mining industry will increase in 2021 will mainly depend on the progress of the Layer 2 expansion plan. If the mainstream DeFi applications are migrated to the Layer 2 network, it may have a positive impact on stability and even lower fee.
The difficulty of mining continues to increase, and excess returns still exist
Judging from the network status, the mining difficulty of the Bitcoin network has been adjusted 28 times throughout the year, of which only 9 times have been lowered, and the remaining 17 times have all been raised. Among them, the increase was the largest on June 16, and it was increased in a single time. Approximately 14.95%, and there are four difficulty increases by more than 8%. The cumulative increase in difficulty for the whole year is about 43.79%. Compared with the cumulative increase of 97.67% in 2019, the difficulty adjustment is relatively mild this year.
The adjustment range of Ethereum’s mining difficulty throughout the year is slightly higher than that of Bitcoin in the same period. The mining difficulty increased from 2456 T at the beginning of the year to 3728 T at the end of the year, an increase of about 52.20% for the whole year, which is the same as the 5.32% increase for the whole year of 2019. Compared with this year, the difficulty of ETH mining has been greatly improved.
Changes in mining difficulty are inseparable from changes in computing power. In the mining cycle, the rise in currency prices-the increase in computing power-the increase in difficulty has constituted a causal chain reaction. The moderate increase in the difficulty of BTC mining is a reflection of the moderate increase in the computing power of the entire network. According to statistics, in 2020, Bitcoin’s entire network computing power increased from 112.93 EH/s at the beginning of the year to 153.48 EH/s at the end of the year. The annual increase was about 35.91%, which was a significant drop from the 143.59% increase in the entire network’s computing power in 2019. Compared with the 304.74% increase in BTC in 2020, the moderate increase in computing power gives the mining industry a theoretical opportunity to obtain excess profits.
On the other hand, the sharp increase in the difficulty of ETH mining is also a reflection of the substantial increase in the computing power of the entire network. According to statistics, in 2020, the total computing power of Ethereum will increase from 141.55 TH/s at the beginning of the year to 281.37 TH/s at the end of the year, an increase of about 98.78% throughout the year. Compared with the 10.54% drop in 2019, the computing power of the entire Ethereum network will rise sharply in 2020, and the fundamentals of mining have been greatly improved.
Stimulated by the favorable ecological application of Ethereum, ETH has increased by 468.64% throughout the year, far exceeding the increase in computing power of the entire network. This makes theoretically ETH mining more likely than BTC mining to obtain excess profits in 2020.
F2Pool and SparkPool respectively dominate the two major mining companies, and the estimated annual income of 8 mining pools is over 10 million
Mining pools are a major participant in the mining industry and one of the signs of mining maturity. From the perspective of the annual average computing power share, F2Pool is the mining pool with the highest computing power share in 2020, with an average annual computing power share of approximately 17.53%, followed by Poolin and BTC.com, with an average annual computing power share of approximately 14.81% and 12.30%. In addition, AntPool’s annual average computing power share also exceeds 10%, which is about 10.97%.
If you observe the change in the share of the main mining pool’s computing power in a smaller time period, you can find that the competition between the big BTC mining pools is still very fierce. Since the beginning of this year, except for F2Pool which basically holds the highest share of computing power, the rankings of other mining pools are constantly changing. For example, Poolin, BTC.com, and AntPool, which are ranked second to fourth in computing power share, alternate in their ranking markets, while the share competition among the mining pools that rank lower in computing power share is more intense.
However, similar to the exchange, the scale effect of large BTC mining pools has been highlighted. It is difficult for these relatively small mining pools to compete with the large mining pools, even if they exceeded 5% in May this year. The roadside mining pool, which ranks No. 5 in the “airborne” market in terms of computing power share, also failed to continue its strong development momentum to further occupy its share.
Another big news in the field of mining pools in 2020 is that exchange mining pools are “showing their heads.” Huobi.pool, OKExPool, and Binance Pool have set up BTC mining pools one after another. As of the end of the year, the share of computing power of the three major exchanges was different. It is about 9.39%, 3.57% and 11.48%. From a trend point of view, the computing power share of Huobi.pool and Binance Pool continues to grow, especially Binance Pool. In the fourth quarter of the BTC market, its computing power share increased significantly by more than 4%, and the market ranking rose. 4 places.
The share of the ETH mining pool’s computing power is relatively stable, and the computing power is more concentrated. The average annual computing power share of the three major mining pools of SparkPool, Ethermine and F2Pool has reached 75.51%, of which SparkPool’s average annual computing power share accounts for 32.69%. From the perspective of monthly changes in computing power share, except for F2Pool, which suddenly occupied 73.47% of the total network computing power share in June, SparkPool has consistently ranked first among ETH mining pools during other periods.
From the perspective of the correlation between block output and computing power share of major BTC mining pools, Binance Pool in 2020 is the best “rhythmic” mining pool. The annual computing power is highly correlated with the level of blockchain output. Positive correlation, Pearson’s coefficient exceeds 0.9. Other mining pools with better “rhythm” include Huobi.pool and ViaBTC. The computing power and output of the two mining pools are weakly positively correlated, and the Pearson coefficient is about 0.6 or more. One thing these mining pools have in common is that in the fourth quarter, when the price of BTC began to climb rapidly, its share of computing power also increased.
On the contrary, the computing power and blockchain output of Poolin and SlushPool are negatively correlated, and the Pearson coefficients reached approximately -0.81 and -0.63, respectively. The common feature is that in the fourth quarter, when the BTC price starts to rise rapidly When it climbs, its share of computing power decreases, and block output decreases.
Other large mining pools, such as AntPool, BTC.com, and F2Pool, have relatively stable performance, and computing power and block output are basically not statistically related.
Among the Ethereum mining pools, Spider Pool is the only mining pool with a high degree of positive correlation between hashrate and block output. The Pearson coefficient is about 0.77, which means that the increase in the share of Spider Pool’s hashrate coincides with the price of ETH. increase. On the contrary, the computing power of UUPool and BWPool is highly negatively correlated with block output, and the Pearson coefficient is around -0.7.
Like BTC mining pools, large ETH mining pools, such as SparkPool, Ethermine, and F2Pool, are not statistically related to their computing power and block output, and block output throughout the year is relatively stable.
In theory, the computing power of a mining pool is directly related to income. The higher the computing power, the greater the amount of blocks produced, and the higher the income. On the other hand, income and currency prices are also related, but since the distribution of currency-based revenue, mining pools may not necessarily be converted into legal currency-based revenue, so the impact of currency prices on mining pool revenue is very random. In order to uniformly observe the income of the mining pool, this article will estimate the mining income based on the currency price of the day.
According to statistics, F2Pool, Poolin, BTC.com and AntPool with the highest share of computing power in the BTC mining pool also have the highest estimated total annual output. In 2020, the mining output is expected to exceed 500 million US dollars. The highest F2Pool is expected to output. 888 million US dollars. If estimated based on a 3% service fee, there are 6 mining pools with service fee income exceeding 10 million U.S. dollars, of which F2Pool and Poolin’s service fee income exceeds 20 million U.S. dollars.
Compared with 2019, under the same fee rate, the income of different mining pools changes due to changes in the share of computing power. For example, in 2019, BTC.com has the highest average annual computing power share and the highest income, about 26.22 million U.S. dollars. F2Pool has the highest average annual computing power share in 2020, with an income of about 26.64 million U.S. dollars. But on the whole, the revenue of BTC mining is relatively stable. According to statistics, with 1% of the computing power of the entire network, the service fee expected to be obtained in 2019 is approximately US$1.54 million, and the service fee expected to be available in 2020 is approximately The US$1.49 million is related to the fact that BTC mining has maintained a similar total output scale in the past two years.
In order to estimate the total annual output of the ETH mining pool, PAData equates the mining pool’s computing power share to its share in the total ETH mining output, and then estimates the total annual output of each mining pool. However, here The total annual output does not consider the rewards of uncle blocks and empty blocks, so the actual total output may be higher than the estimated value.
According to statistics, Spark Pool, Ethermine, and F2Pool, the three largest mining pools with the highest share of computing power, are also the mining pools with the highest output income. The annual output is expected to reach approximately US$772 million, US$582 million and US$257 million, respectively. It is worth noting that the total annual output of Spark Pool, the ETH head mining pool, is already equivalent to the total annual output of the BTC head mining pool. In addition, the total estimated annual output of Spider Pool and Nano Pool also exceeds US$10 million. If the mining service fee income of the mining pool is estimated according to the service fee rate of 2%, only the estimated service fee of Spark Pool and Ethermine exceeds 10 million US dollars.
Bitmain still dominates BTC mining machines, and the market for customized Ethereum branded machines is emerging
In addition to mining pools, mining machine manufacturers are also important participants in the mining industry, and compared to mining pools, mining machine manufacturers are in a more upstream position in the industry. According to F2Pool’s monitoring of the mining machine market, as of the end of January 2021, there are currently 101 BTC mining machines on the market. According to the brand classification, Bitmain, Bitmicro and Jianan Zhizhi are the three manufacturers that produce the most mining machines. Among them, Bitmain produced a total of 25 BTC mining machines, and Bitmain and Jianan Zhizhi produced 19 and 17 respectively. A BTC miner. Yibang International, one of the top three traditional mining machines, only produced 10 types of mining machines, which is equivalent to the number of mining machines produced by Xindong.
Among the 15 best profitable mining machines currently on the market, Bitmain and Bitmicro each have 4, and Jianan Zhizhi and Hornbill each have 2 models. The average computing power of the 15 mining machines reached 89 T. If the cost is calculated at a price of 0.34 yuan/kWh, the average daily net income of these mining machines is about 94.33 yuan. There are 4 mining machines with daily net income exceeding 100 yuan, namely Shenma M30S++, Ant S19 Pro, Shenma M30S+ and Ant S19. Among them, the Shenma M30S++ with the highest income reached 124.5 yuan.
ETH mining machines can be divided into assembled machines and custom machines. The rapid development of custom machines in 2020 is a sign of the gradual maturity of ETH mining and is also a development direction of ETH mining in the future. According to F2Pool’s statistics, as of the end of January 2021, there are a total of 60 ETH mining machines on the market, of which there are 35 types of assembled machines, accounting for 58.33%, and about 25 customized models, accounting for 41.67%.
Among the assembly machines, there are 13 types of RX graphics mining machines and 10 types of GTX graphics mining machines, and the two together account for 65.71% of the total assembly machines. Among the customized machines, Xindong, Panda and Langshen are the more mainstream brands. Among them, Xindong has launched 5 customized mining machines, Panda and Langshen respectively launched 3 customized mining machines, and the three together accounted for the customized machine market. Of 47.83%.
Judging from the revenue performance of ETH mining machines, among the 15 mining machines with the highest daily net income, there are 8 assembled machines and 7 customized machines. Among the customized machines, Core Motion has a total of 4 models with better revenue performance, which is the strongest product revenue capability among all customized manufacturers.
The average computing power of the 15 mining machines is about 747M, among which the Linzhi Phoenix Phoenix has the highest computing power, which has a computing power of 2600M, which is much higher than other ETH mining machines on the market. If the cost is calculated at a price of 0.34 yuan/kWh, the average daily net income of these 15 mining machines is about 418 yuan. Among them, Linzhi Phoenix’s daily net income reached 1,477 yuan, which is also much higher than other mining machines on the market.
