Battle of the Hashrate: Why Mining Is the New Frontier for Bitcoin Liquidity?

The 2021 BTC bull run shows no signs of slowing down. BTC’s recent all-time high of $65,000 may just be the first of many to come this cycle. Most analysts agree that Bitcoin’s price cycle often revolves around its halving event, which means that the block rewards for participating in the Bitcoin network proof-of-work consensus will be halved. At the time of the 2016 halving, the price of BTC was around $650, and it reached nearly $20,000 in the ensuing 2017 bull run, during which it gained more than 3,000%.

While such calculations are somewhat crude, if we extrapolate these gains to the 2020 halving, then clearly the bull market still has a long way to go. The most recent halving took place on May 11, 2020, when the price of BTC was $8,700, so if a similar expected percentage gain can occur, the price of BTC will exceed $250,000.

The effective computing power of Chia's entire network is 34.92EiB and the mining output is 2,352,426: Jinse Finance reported that according to chiaexplorer data, on November 21, 2021, the current effective computing power of Chia's entire network is 34.92EiB, and the current total amount of XCH is 23,352,426. 2,352,426 pieces were issued. At present, 0.0003 XCH can be produced per TiB computing power per day, and it takes about 10 years and 92 days to mine 1 XCH with 1 TiB computing power. The quotation shows that the current price of XCH is 146.21 US dollars, an intraday increase of 6.25%. [2021/11/21 7:01:59]

Some analysts are even more optimistic. Former institutional quantitative trader PlanB (who created Bitcoin's "stock-to-flow" model) predicts that the price of BTC could reach $500,000 during this bull market cycle.

The effective computing power of Chia's entire network is 4128PiB, and the mining output is 534258 pieces: Jinse Finance reported that according to chiaexplorer data, on May 13, 2021, the current effective computing power of Chia's entire network is 4128PiB, the number of active-zce miners is 120,357, and the current total amount of XCH is 21,545,144 , the mining output is 545,144. Currently, 0.0022 XCH can be produced per TiB computing power per day, and it takes about 1 year, 74 days and 8 hours to mine 1 XCH with 1 TiB computing power. According to the OKEx market, the current price of XCH is $1,068, an intraday increase of 6.5%. [2021/5/13 21:57:12]

The halving is a fundamental driver of BTC prices because it is stipulated in the Bitcoin protocol that only 21 million Bitcoins will be created. This fixed, predictable supply all but eliminates inflationary forces that can dilute value.

Filecoin’s current test network’s effective computing power is 288.72PiB: According to IPFS100.com, filfox browser data shows that the current test network block height is 84552, the entire network’s effective computing power is 288.72PiB, and the total pledge amount is about 7.03 million FIL, the number of active-zce miners is 418, the reward for each block is 11.8917 FIL, the output in the past 24 hours is 137834 FIL, and the average mining income in 24 hours is 0.48 FIL/TiB;

Currently, the top three effective computing power are: t09037 (SeedPlan-Saturn) ranked first with 17.45 PiB, t01248 (Zhiheyun) ranked second with 16.94 PiB, and t02775 (STCloud-Linden) ranked second with 14.54 PiB third. [2020/9/23]

But it’s worth noting that the investor base driving this bull market is nothing like the one in 2017. Institutional interest is now sufficiently sparked that companies such as MicroStrategy and Tesla have added BTC to their balance sheets, and even traditional financial institutions such as Deutsche Bank and Bank of New York Mellon have begun offering cryptocurrency services to their clients. The sudden participation of institutions has brought about a snowball effect. Driven by FOMO sentiment, the market has an unprecedented demand for BTC liquidity. Such a sharp rise in prices can easily lead to the bull market predicted by PlanB.

The current real-time computing power of the entire network is 90.66EH/s: Jinse Finance reported that the data shows that the top ten real-time mining pools in the world are F2Pool (3-day lucky value: 92.67%), Poolin (93.85%), BTC.com (80.83%), Antpool (110.50%), 58COIN&1THash (109.02%), ViaBTC (41.89%), Lubian.com, SlushPool (110.23%), OKExPool (100.37%), Huobi.pool (123.19%). The current real-time computing power of the entire network is 90.66EH/s. [2020/5/24]

However, changes are also happening quietly. Data from Glassnode shows that as BTC prices rise, miners have recently started "hoarding coins" rather than selling them for profit, which will create an even bigger supply crunch. As Glassnode CEO Rafael Schultze-Kraft said on Twitter: "Miners now have little incentive to cash out, they have other means (such as borrowing) to cover capital expenses and operating costs."

Apparently, they expect the continued entry of institutions to drive up prices, thinking it will be worth the wait before cashing in on the rewards. As a result, there have been some fundamental, unprecedented changes in the BTC mining space.

In recent years, China has taken the lead in the field of mining, and its BTC mining volume accounts for about 65% of the global total, while the United States only accounts for more than 7%. The cost of electricity in China is relatively low in the world, and mining activities in China are profitable even when the price of BTC is low.

However, now that a lot of money is flowing into Bitcoin, and a supply crunch is coming, mining suddenly becomes more attractive to Western institutions.

In March, Canadian firm Neptune Digital Assets confirmed it was planning to develop its own BTC mining facility in Alberta using sustainable energy. Apifiny, a digital asset trading network headquartered in the United States, plans to go public this year, and recently announced that it has purchased 4,243 ASIC bitcoin mining machines for bitcoin mining. Coinshares chief strategy officer Meltem Demirors, who recently invested in Compass Mining, calculates that more than $200 million has been spent building mining capacity in the U.S. alone.

The increase in U.S. mining capacity will bring benefits to U.S. digital asset companies and the entire cryptocurrency market. Mining will add new liquidity channels for U.S. traders and direct access to market-making services, ensuring better liquidity across the cryptocurrency market to meet growing institutional demand. Therefore, mining can also give liquidity providers a competitive advantage. the

Reducing reliance on Chinese BTC mining is a good thing. For a long time, the decentralization of Bitcoin has been questioned, because mining is mainly concentrated in a few large mining pools in China, and the distribution of mining to other countries and more interested people helps To improve the security of the entire network.

As the demand continues to rise, a new solution that can meet the needs of the market is required. Additionally, if the previous generation of miners intends to hold as prices rise, this creates a new incentive for institutions to enter the mining space and ensures that liquidity continues to flow.

Written by: Haohan, Apifiny CEO

Source: Nasdaq

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