Bitcoin mining has grown into a huge industry over the past ten years. The Bitcoin mining industry generates approximately $56 million on average every day. While there seem to be more opportunities open for new and existing businesses and investors, understanding the cycle of the bitcoin market and the factors that affect miners is crucial.
Davis Hui, the VP of Canaan Inc. said at the Bitcoin 2023 Miami event that the hash rate of bitcoin has become part of the challenges that miners face in the industry today. He noted that there is always a connection between halving, hash rate, and miners’ income. “Every time the bitcoin halving occurs, a new cycle is initiated,” he said. Each halving means that the miners’ income will be reduced by half.
The hash rate of Bitcoin is a measure of the computational power used to secure the network. It has been steadily increasing over time due to factors such as the increasing popularity of Bitcoin mining, the development of more efficient mining hardware, and the availability of cheap electricity. This high hash rate contributes to the security of Bitcoin. A high hash rate is a good thing for Bitcoin, as it increases security, stability, and decentralization. It is measured in EH/s, TH/s, GH/s, and MH/s.
He revealed that according to historical figures, bitcoin miners earn less from mining activities every three years, which happened “in 2014, 2018, and 2022.” The effect is that several miners tend to put off their machines or quit the business entirely, which makes the hash rate drop. However, as the price of bitcoin increases due to scarcity, the same miners who had stopped mining resume their activities. “They try to turn on their machine,” which reverses the cycle as the mining difficulty rises.
Increase in energy prices, political impact, and
Davis added that when this happens, these miners are forced to get better mining machines to maximize their profit in the mining business because a higher hash rate means more energy is consumed. And in a place like the US, energy prices are increasing. “The energy price has increased from 6.5 to 8.5 in the past two years, so this will definitely reduce the profit margin of miners.”
During his presentation, the VP noted that public concern over Bitcoin mining and its environmental impact creates political uncertainty in the markets. All of these combined are the reasons why the Bitcoin hash rate is never stable, as is the mining business.
Canaan Inc. addressing the issue
Davis explained that these challenges are the source of inspiration for the existence of Canaan Inc. Canaan Inc. is a Chinese technology company that designs, manufactures, and sells Bitcoin mining machines. The company was founded in 2013 by Nangeng Zhang and is headquartered in Shanghai, China. Canaan’s products are sold worldwide and are used by both individual miners and large mining farms.
Canaan’s most popular mining machine is the Avalon Miner, which is a line of ASIC-based miners that are known for their high hash rate and low power consumption. The Avalon Miner 1246, for example, has a hash rate of 124.6 TH/s and consumes 3100 watts of power.
With more than 10 years of experience dedicated to research and development, Davis said that Canaan Inc sees an opportunity in pursuing Green Energy as a source of mining power while allowing miners to have sustainable profit margins. This has driven the company to design an Immersion System for miners. He added that it is suitable for harsh weather conditions in places like Texas, and “in addition, the waste of the heat can also be reused” to heat homes as well as for cooking energy.
Canaan Inc has also designed new mining equipment that is easy to install, as its engineers have used two hours to install 324 mining machines. Davis revealed that the company is expanding its global presence, particularly in Africa, and aims to incentivize miners to reactivate their idle mining machines.
Read also;
Understanding Mining Difficulty in Blockchain: A Comprehensive Guide
Bitcoin mining: the past, present, and future
