Research Summary
The report focuses on the state of Bitcoin mining in Q4 2023, highlighting the expansion of hashrate across North America and globally, the surge in miner revenues, and the upcoming halving event in spring 2024. It also discusses changes in mining infrastructure, regulatory discussions, debates within the Bitcoin community, and advancements in miner efficiency. The report further explores the role of publicly traded mining companies, the impact of transaction fees, and the implications of the Bitcoin halving event.
Key Takeaways
Bitcoin’s Hashrate Surge
- Significant Increase in Hashrate: Bitcoin’s hashrate, a measure of computational resources allocated to mining, surged to 480 EH/s in 2023 from 250 EH/s at the start of the year. This increase was driven by publicly traded mining companies expanding operations throughout the bear market.
Revenue Boost for Miners
- Surge in Miner Revenues: Improving market conditions led to total quarterly mining revenue exceeding $2B in Q2, Q3, and Q4 of 2023, backed by Bitcoin’s 150%+ YTD climb over $40K. Additionally, over $180M in transaction fees were paid to miners in Q2, and over $200M so far in Q4.
Upcoming Bitcoin Halving Event
- Impending Halving Event: The upcoming Bitcoin halving event in spring 2024, which will cut block rewards from 6.25 BTC to 3.125 BTC, presents a complex scenario for operators managing substantial capital investments in physical infrastructure and computing resources.
Publicly Traded Mining Companies’ Performance
- Outperformance of Mining Stocks: With Bitcoin price and transaction fees up in tandem, publicly-traded mining firms have seen significant returns. Bitcoin is up 150%+ year-to-date, but mining stocks have outperformed this benchmark with a mean return of 352% across a basket of 10 top mining stocks.
Debate within the Bitcoin Community
- Emerging Debate: A new debate is gripping the Bitcoin community, with every quarter in 2023 bringing in a new wave of mempool congestion. This has led to a fresh spike in transaction fees and therefore, mining rewards.
Actionable Insights
- Monitor the Impact of the Halving Event: The upcoming Bitcoin halving event in spring 2024 will test operators and may spark consolidation among miners. It’s crucial to monitor the impact of this event on the mining industry.
- Stay Abreast of Regulatory Discussions: Miners need to keep abreast of political discussions and increased scrutiny, as exemplified by New York’s two-year moratorium on new mining operations.
- Consider Global Landscape: While North American miners dominated 2023, the global and geographically fluid landscape of Bitcoin mining should not be overlooked. New projects in other regions continue to shape the global Bitcoin mining narrative.
