The rain has come. The machines are humming. This should be the best time of the year for China’s bitcoin miners. The monsoon season, generally from June to October, brings excessive rain and thus cheap hydro electricity.
But this year is different, proving to be harder than ever for China’s bitcoin miners and mining farm operators who are estimated to dominate 65% of the global multi-billion dollar bitcoin mining industry.
Since last summer, many mining farm operators rushed to build new facilities in China’s southwestern region in anticipation of a dramatic price rise with bitcoin’s halving.
But mining difficulty has now almost doubled compared to the monsoon season last year, while block rewards have halved, meaning it is more difficult to mine, with less rewards. Bitcoin miners that have entered the market since last year have to wait much longer to see a return on their investment in mining hardware and facilities.
Thomas Heller, global business director of mining pool F2Pool, summarized the situation in a recent blog post: “We’re halfway through 2020 and the mining industry has already faced several enormous challenges.”
“Miners had to battle off the macroeconomic black swan of March, pass through the smoke of the halving and a pandemic, and now they’re gearing up for the rest of the year’s competitive battlefield,” he wrote.
Read more: Bitcoin Mining Difficulty Sets New Record High 2 Months After Halving
Harder than ever
Many miners expected bitcoin’s price to rise sharply after the halving, said Kevin Pan, CEO and co-founder of the China-based PoolIn, one of the two biggest bitcoin mining pools in the world (along with F2Pool).
“In reality, not only there was not much price momentum driven by halving, there came the mega sell-off on March 12, which caused a large scale of forced liquidation and loss,” he said.
For two months after halving, bitcoin’s price largely remained static around $9,000. Although it jumped above $10,000 last week and is now changing hands over $11,000, it is still at a similar price level seen at this time last year.
In contrast, the network’s mining difficulty rose to an all-time-level within two months after halving. It’s now almost twice as difficult to mine bitcoin compared to last July, while block rewards have halved.
Without a significant price breakout, bitcoin miner’s daily revenue has dropped by 70% compared to last year, said Pan, although the recent bitcoin price jump has helped improving the situation.
Indeed, Bitinfochart’s data shows bitcoin’s daily mining revenue was around $0.33 per one terahashes second (TH/s) of computing power in July 2019. It has since then declined to now around $0.1 per TH/s.
Meanwhile, a surge in interest and investment in bitcoin mining since last year have led to a surplus of newly constructed mining facilities in…