Bitcoin mining metrics for December 2020
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Bitcoin mining metrics for December 2020
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The bitcoin price reached new highs this month with mining revenue spiking to over $20 USD / MCF of natural gas!
Monthly Mining Metrics
December 2020
December was an exciting month for bitcoin holders as the price reached new all-time-highs, smashing through the previous high of ~$20,000 USD set in December 2017. With price peaking at $34,000 USD just yesterday, mining revenue is starting to get exciting again for oil and gas producers.
Flying High
Bitcoin has outperformed pretty much every other asset in 2020, which should not be surprising really given it’s history. For the year it yielded a 450% increase and is not showing any signs of slowing down.
So what’s the deal??
I don’t think we need to point to any single reason for the price action except that it is simply a better form of money and will continue to attract demand. If you haven’t studied bitcoin at all I suggest you start with this essay if you care to understand what I mean (https://vijayboyapati.medium.com/the-bullish-case-for-bitcoin-6ecc8bdecc1).
In regards to network Difficulty (which measures the level of competition in the hashpower market), it tends to lag price action and that seems to be holding true right now as it is holding relatively flat. This is great for miners as revenue per kWh or MCF is spiking with the price.
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Natural gas miners earning $10 - 25 USD / MCF
When it comes to mining, revenue per unit energy expenditure is what it’s all about. The exciting price action and relatively flat difficulty through December has led to significant increases in the value of the Hash with revenue / MCF spiking to (10 - 25 USD presently. After a brutally competitive summer this is a welcome sight and a return to former glory. Really makes you question why you would ever sink capital into a sales pipeline doesn’t it?
Hash Value is above historical trends
This chart shows the value of a hash (a hash is a term used for a single calculation) over time and in a sense is very much similar to what you are already use to with the value of a barrel of oil ()/boe).
Every hash completed by a miner requires energy expenditure so a hash is comparable to a unit of energy, like the boe. This chart shows the total revenue of the entire bitcoin network divided by the total amount of hashes over time. Over the last two+ years we see a bit of a trend (red line) showing what perhaps could be a “resistance level” in miner revenue.
When the hash value drops below this value it might be a sign that there is an oversupply of hashpower (too much mining relative to market returns) which results in less investment into mining. Conversely, when the value is above the red line we can probably expect to see an increase in capital inflow into mining farms which will then act to increase the supply of hashpower and drive down the hash value. Recent announcements by big players in the mining space here (https://www.coindesk.com/core-scientific-bitmain-s19-antminer-order) and here (https://www.coindesk.com/riot-bitmain-december-2020-asic-order) (among many others) add credibility to this argument.
The bitcoin mining market is really no different than any market as all markets are governed by supply and demand and I find this metric very interesting to track and use as a tool to time the market.
Tour of our 90 kW Hash Hut datacenter. This is the perfect solution to pair with gensets < 90 kW. Contact sales@upstreamdata for more info on sizing and price.
Thank you for joining us on our journey!
We started our journey in 2016 and let me tell you that introducing a novel, unprecedented technology to an industry that is known for it’s resistance to change has been a really fun challenge!
Despite the early skepticism, oil and gas producers continue to warm up to our Ohmm datacenter technology and our team continues to grow with our recent acquisition of our Lloydminster fabrication facility.
While we are based in Canada we have actually been doing most of our sales in the US and have been exporting more than we deploy locally, which is bittersweet because personally I am extremely passionate about Canadian oil and gas.
On behalf of Upstream Data Inc. I would like to thank you for your continued interest in our business and would like to wish you all a prosperous and hopeful 2021!
Sincerely,
Steve Barbour
CEO, Upstream Data Inc.
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New to Bitcoin? We're here to help!
We’ve been helping oil and gas producers increase revenue, reduce GHG emissions and generate bitcoin since 2017.
For more information please contact sales@upstreamdata.ca
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