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Source: Hashrate Index
The Hashrate Index 2024 first quarter report has been released. Given the impact of Bitcoin’s fourth halving, we decided to analyze the direct impact of the halving in addition to reviewing the first quarter data in this report.
Bitcoin’s fourth halving has come to an end, and this halving is considered the most influential yet.The Bitcoin mining market has never been so large, and stakeholders have never reached so many.In addition, Bitcoin has gained unprecedented mainstream acceptance, such as the Bitcoin ETF launched in January this year.Transaction activities based on the Bitcoin network have also reached unprecedented heights, including transaction fees driven by non-financial uses such as Ordinal Inscriptions and Runes protocols, which provide support when miners need it most.
In this report, we reviewed the first quarter of 2024 through the perspective of Bitcoin’s fourth halving, and included data from April and May in the first week to show that halving is used to calculate the network data and calculationThe direct impact of power prices, mining machine prices, Bitcoin mining stocks and other aspects of mining.The full report can be downloaded here (https://hashrateindex.com/blog/content/files/2024/05/Hashrate-Index-Q1-2024-Report-1.pdf).
In this industry newsletter, we will briefly introduce the data and analysis cases that will be expanded in detail in the report.
Bitcoin’s computing power will increase first and then decrease
In the first quarter of 2024, Bitcoin’s 7-day average computing power value increased by 19%, reaching 611EH/s.As of May 6, 2024, the value showed 604 EH/s, an increase of 17% from the beginning of the year and a year-on-year increase of 73%.
Figure 1: Bitcoin’s 7-day average computing power trend
In the week of April 29, computing power began to gradually decline.From the above figure, we can see that both the 3-day average and the 7-day average have shown a downward trend.As of May 8, Bitcoin’s seven-day average computing power value has dropped from 650 EH/s on the day of halving to 581 EH/s, a decrease of 11%.In contrast, after the halving in 2020, Bitcoin’s computing power dropped by 15%.
The bottom is hit after the price of computing power bursts
Under the US dollar standard, Bitcoin’s computing power price rose 11% in the first quarter of 2024 to US$109.57/PH/day, an year-on-year increase of 38%.Under the currency standard, the computing power price fell by 33%, to 0.00156 BTC/PH/day, a year-on-year decrease of 44%.
Figure 2: Comparison of the computing power price trends under the currency standard and the US dollar standard (daily average)
As of the time of writing (May 2, 2024), the computing power price under the US dollar standard was US$45/PH/day, setting a historical low of US$44.43/PH/day on May 1, 2024.
As shown in the figure below, the computing power price at the US dollar standard dropped to US$71.40/PH/day at the halving time, but thanks to Runes, the computing power price quickly recovered to above US$100/PH/day, and after the halving timeThe next day reached a high of $183/PH/day, which is also the highest since April 2022 (all times in the chart below are coordinated Universal Time).As the transaction volume decreased sharply under the Runes protocol, the computing power price also fell, and it fell below $50/PH/day for the first time on April 28, 2024.
Figure 3: Changes in average hourly computing power price under the US dollar standard from April 18 to April 30, 2024
Forward computing power improves at historical lowest level
Computing power prices under the US dollar standard are currently below their all-time lows, but computing power traders believe that they have bottomed out (at least in the short term).It is worth noting that as of May 6, 2024, Luxor’s computing power futures trading was in a premium state until October 2023, which means the computing power prices of these futures contracts (they are essentially futures contracts, although theyis OTC, not on exchanges) higher than the current spot price.
The figure below shows the Bitcoin denomination curve trend of Luxor computing power derivative contracts from November 2023 to May 2024.We derive this forward curve by averaging the lowest inquiry and highest bids in Luxor’s computing power futures order book in the first trading week of each calendar month.So, for example, for November data points, we take the inquiry for the first trading week of the futures contracts for November, December, January, February, March and April minus the bid average.These futures prices are then compared with the monthly average of computing power prices.
Figure 4: Comparison of Luxor forward computing power curve and actual computing power price under the currency standard
How Runes affect transaction fees
Miners should thank Runes for his amazing contribution to maintaining the computing power price bubble in the days after the halving.This new standard for so-called interchangeable tokens was launched on Block 840,000 (the block that triggered the halving), which is responsible for promoting transactions of 36.75 BTC out of 37.63 BTC, which makes the block inThe value at the time of being mined reached a record $2.6 million.
From halving to block 841,539, Runes created transaction fees of 1819.8 BTC, worth $117 million, accounting for 43% of all miners earned in this period.By comparison, miners earned transaction fees for the full year of 2023 at 23,445 BTC, with a total value of $797.7 million.
Figure 5: Daily Bitcoin transaction fees
As shown in the figure above, Runes trading activity has decreased significantly.In fact, as of April 30, 2024, miners have received most (87%) of transaction fees in the first four days of Runes launch.
The mining machine market is gradually sluggish before the halving
As expected, the mining machine market cooled down sharply before half.Although Bitcoin prices hit record highs and the average computing power price reached USD 91.14/PH/day in the first quarter of 2024 (a 13% increase from the average in the fourth quarter of 2023), the price of mining machines isThe downward trend and the performance of procurement volume stagnated in the weeks before and after the halving.
Figure 6: Change trends in price of mining machines such as different energy efficiency
Compared with the fourth quarter of 2023, despite further growth in computing power prices and higher quarterly averages, the prices of miners of all energy efficiency levels fell in this quarter and continued to decline around the halving in April., the reason is that miners and miner traders price the impact of halving on computing power prices.
Bitcoin mining companies have to compete with AI data centers for power resources
Energy consumption in AI data centers is relatively low in 2023, but this will change in the coming years as global demand for AI increases and new AI data centers are put into operation around the world.Bitcoin miners will compete with these data centers for power resources, which may curb the growth of Bitcoin’s global computing power.
According to a recent International Energy Agency report, global energy consumption in AI data centers may increase by 10 times as of 2026.The following figure shows the energy consumption of traditional data centers, Bitcoin mines and AI data centers in 2022, as well as the estimated data for 2023 (because there is currently no clear public report involving the number of data centers in that year), andForecast for 2026.For Bitcoin mining data, we refer to the Bitcoin Power Consumption Index at the University of Cambridge.For artificial intelligence data, we use the forecast data for 2026 in the International Energy Agency report. At the same time, we estimate the data for 2023 based on Chat-GPT’s daily power consumption and calculate the entire artificial based on Chat-GPT’s market shareThe situation in the intelligent computing industry.For traditional data centers, we used IEA data for 2022 and forecast data for 2026, and estimated energy use in 2023 based on the annual growth rate of energy use by international data companies.
Figure 7: Energy consumption in traditional data centers, Bitcoin mines and AI data centers
Computing power growth will be the mining theme in 2024
In 2023, listed mining companies took the initiative to order a large number of next-generation mining equipment, including S21, T21, M50 series, M60 series, S19k Pro and S19 XP, etc.These orders will be delivered in batches throughout the year, and many mining companies have invested money to purchase additional equipment at forward fixed prices.Assuming these miners can deploy these devices after delivery instead of keeping them in stock like in the past large-scale mining machine orders, these listed companies will bring a lot of computing power, which will be witnessed in 2024 and 2025.A tide of computing power is launched.An example is that the total computing power of listed mining machine purchase orders for mining machines in 2024 reached 76.6 EH/s, of which 12.9 EH/s should be delivered in the first quarter of 2024 (assuming the delivery time remains unchanged).
Figure 8: Distribution of purchase orders of Bitcoin mining machines (EH/s)
