Mining difficulty hits a new high, dry season is approaching, BTC miners are really worried

For miners, September was a month of mixed emotions.

In early September, Sushiswap set off a climax of liquidity mining. Ethereum's daily transaction fee set a record on the second day of Sushi's launch, with daily cumulative transaction fees exceeding 40,000 ETH. In the first half of September, the Ethereum chain's transaction fees were 243,200 ETH, equivalent to approximately US$96,436,100, accounting for 58% of Ethereum miners' mining income. As the market corrected and DeFi cooled down, Uniswap liquidity mining emerged and launched an unprecedented large airdrop. On September 17, the day the news was announced, the Ethereum chain was congested again, and the 1-hour transaction fee hit a new record high. The cumulative transaction fees on that day exceeded 33,000 ETH.

As DeFi becomes popular, Ethereum miners are well fed, but on the other hand, Bitcoin miners are having some headaches.

In September, Bitcoin computing power continued to grow. OKlink data shows that the total network computing power increased from about 123EH/s at the beginning of the month to 144.44EH/s on September 18, setting a new record. After the most recent difficulty adjustment of nearly 10%, the difficulty of Bitcoin mining has now reached 19.32T, also setting a new high. What is even more worrying for miners is that the increase in mining difficulty will continue. According to BTC.com's forecast, after the next adjustment, the total network difficulty may reach 21.07T, an increase of 9.09%. As the difficulty soared, the unit computing power income also dropped again and again, and is currently 0.00000651 BTC/T, the lowest point in history.

Data source: OKlink

At the same time, most of China's Bitcoin mining is concentrated in Sichuan, which is rich in hydropower resources. There has always been a saying that there is a flood season and a dry season, and the time point for this transition is around May and October every year. After October, it is the dry season in Sichuan, and Sichuan's power supply will be reduced by about 80%.

The dry season is approaching, and miners are taking advantage of the last time to start old machines, causing the computing power to increase. This seems to be a logical explanation. However, Chen Lei, the founder of BitBlueWhale, believes that this is not the only factor. He believes that the increase in computing power is due to the entry of new machines on the one hand, and on the other hand, there are some mining farms in the north that have been powered on and started up one after another, so it should be caused by the superposition of multiple factors.

In fact, after the flood season, Sichuan's mining machines have only three options: first, shut down, collect dust in the mine, and wait until the flood season next year to restart. Second, go far away to areas with cheaper electricity resources such as Kazakhstan. Third, migrate to thermal power mines in Xinjiang, Inner Mongolia and other places. Some miners holding old machines may face the situation of not being able to dig; some miners started preparing for the deployment of the dry season a month ago, and they are worried about where to move the machines and whether they can afford to move them.

If the relocation is carried out, where will the miners move to? Chen Lei told Babbitt that there are still very few mining farms abroad. There are some new ones in North America this year, and there is some good news in Iran and Kazakhstan, but the total volume is still not large. In addition, due to the impact of the overseas epidemic, most mining machines are still migrating from south to north in China.

"In China, there are not many options for thermal power, with some scattered in Inner Mongolia, Xinjiang and several other provinces in the northwest. In terms of policies, supporting facilities, electricity prices and other aspects, according to the data tracked by the BitBlue Whale team on compliance and crisis events every year, there is no absolutely safe area. Mining sites have always been discussed on a case-by-case basis and each place has its own situation. The general principle of selecting a mine should be to select people, teams and good service providers and partners."

It can be seen that the decline of the computing power of the whole network during the dry season should be an inevitable event. Chen Lei said that in fact, during the entire flood season, even if the computing power has been increasing, the old machines are still filling the load and will not be removed. New machines are only added in small batches. In the dry season, the million-level old machines will not move north, and the production capacity of new machines is also very limited, far from enough to make up for the reduced computing power of the old machines. Therefore, it is foreseeable that the computing power will decline significantly.

So when will the new machines catch up?

Chen Lei believes:

"According to the sporadic news on the chip side, we expect that from the end of this year to the flood season next year, the slow shipment problem of some manufacturers will be improved, and shipments will enter a stable and rising period. Therefore, in the first half of this year's dry season, the new volume will not be large, and the overall significant new volume should be seen in the flood season next year. Of course, all this also depends on the rise and fall of BTC prices."

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