The Hardware/Software Landscape
As Bitcoin hovers around the $6,400 mark in late September 2018, the mining hardware landscape is undergoing a quiet but significant transformation. Bitmain’s Antminer S9, which has been the workhorse of the industry since its release, continues to dominate mining operations worldwide. However, the declining price of Bitcoin is putting intense pressure on miners operating with older or less efficient hardware. The S9i, an upgraded iteration of the popular S9 series, delivers around 14 TH/s at roughly 1,320 watts, while the newer S9j pushes closer to 14.5 TH/s. For miners still running the original S9 or even the S7, the math is becoming increasingly uncomfortable.
Meanwhile, manufacturers are racing to deliver next-generation 7nm ASIC chips. Canaan Creative, one of Bitmain’s primary competitors, has announced plans to release Avalon miners equipped with 7nm technology before the end of the year. Ebang and Halong Mining are also vying for market share with claims of significantly improved energy efficiency. The hardware arms race continues unabated, even as Bitcoin’s price has shed more than 65 percent from its December 2017 all-time high of nearly $20,000.
Hashrate & Difficulty
Despite the brutal bear market, Bitcoin’s network hashrate has demonstrated remarkable resilience throughout 2018. The total hashrate has climbed from approximately 15 exahashes per second (EH/s) at the beginning of the year to over 50 EH/s by September, an increase of more than 230 percent. This growth reflects both the deployment of new, more efficient mining hardware and the expansion of large-scale mining operations, particularly in regions with access to cheap electricity.
The network difficulty, which adjusts approximately every two weeks to maintain a 10-minute block time, has followed suit with consistent upward adjustments. The current difficulty level sits above 7 trillion, a record at this point in Bitcoin’s history. This means that miners collectively need to expend significantly more computational power to solve blocks than they did at the beginning of the year, even as the reward for doing so has diminished in dollar terms.
The disconnect between hashrate growth and price decline is creating an unusual dynamic. More computational power is competing for rewards denominated in a currency that has lost two-thirds of its value. For marginally profitable operations, this squeeze is becoming untenable.
Profitability Metrics
With Bitcoin trading at approximately $6,438 as of September 20, 2018, mining profitability has compressed dramatically since the heady days of late 2017. A single Antminer S9, consuming approximately 1,320 watts of electricity, generates roughly 0.00071 BTC per day. At current prices, that translates to approximately $4.57 in daily revenue. Subtracting electricity costs, which vary widely depending on geographic location, the daily profit ranges from roughly $1.50 to $3.00 for operators with access to electricity at $0.05 to $0.08 per kilowatt-hour.
For miners paying industrial electricity rates above $0.10 per kWh, particularly in regions of North America and parts of Europe, the situation is considerably more dire. At $0.12 per kWh, an S9’s daily electricity cost alone reaches approximately $3.80, leaving less than $0.80 in daily profit before accounting for overhead costs like cooling, facility rental, and hardware depreciation.
Older hardware, such as the Antminer S7 or the Avalon 741, is effectively operating at a loss for most miners. The cost of electricity to run these machines now exceeds the value of the Bitcoin they produce. Many smaller operators have already shut down these units, contributing to a secondary market flooded with discounted second-hand mining equipment.
Environmental Impact
The environmental conversation around Bitcoin mining continues to intensify alongside the industry’s growth. With the network’s total power consumption estimated at between 40 and 60 terawatt-hours annually, Bitcoin mining consumes roughly as much electricity as some small nations. Critics point to the carbon footprint associated with proof-of-work mining, particularly in regions where coal-powered electricity remains the primary energy source.
However, the mining industry is increasingly migrating toward renewable energy sources. Hydroelectric power in China’s Sichuan and Yunnan provinces, geothermal energy in Iceland, and excess natural gas flaring in North America are all becoming important energy sources for mining operations. The search for the cheapest electricity naturally leads miners toward stranded or wasted energy resources, many of which happen to be renewable.
The efficiency gains from next-generation ASIC chips may help offset the environmental concerns. A transition from 16nm to 7nm chips could reduce energy consumption per terahash by 30 to 40 percent, though the overall network hashrate growth may absorb much of these gains.
Strategic Outlook
The current mining economics favor well-capitalized operations with access to both cheap electricity and the latest hardware. Large mining farms in China, Iceland, and Canada continue to expand, banking on a long-term recovery in Bitcoin’s price. Their strategy is straightforward: accumulate Bitcoin now at a discount to their production cost, and sell when prices recover.
For smaller miners, the calculus is more difficult. The breakeven point for an S9 running at $0.06 per kWh sits somewhere around $4,500 to $5,000 per Bitcoin. A further price decline could trigger a wave of miner capitulation, where unprofitable operations are forced to shut down. Such an event would temporarily reduce the hashrate and trigger a downward difficulty adjustment, providing relief to surviving miners.
The upcoming generation of 7nm ASIC miners will reset the competitive landscape once again. Miners who can deploy this hardware early will enjoy a significant efficiency advantage, potentially squeezing out competitors running older equipment. The mining industry is consolidating, and only the most efficient operators will thrive in this challenging market environment.
Disclaimer: This article is for informational purposes only and does not constitute financial or investment advice. Mining profitability calculations are estimates based on current network conditions and may vary. Always conduct your own research before making investment decisions.
BTC at 6400 with S9s pulling 1320W each. margins were brutal. the 7nm race was do or die for every manufacturer
s9 pulling 1320W for 14 TH was 94 J/TH. the s15 got it to 57 J/TH. that gap is why every small op either upgraded or died
s9 miners getting squeezed at $6400 btc. imagine what they went through when it dropped to $3200 two months later
miners who survived to $3200 either had essentially free power or were already industrial scale. the hobbyist era ended right there
Aleks P. the hobbyist era ended in 2018 but people kept trying to mine at home with s9s into 2019 hoping for a price recovery. the electricity bills destroyed whatever savings they had left
Adaeze O. hobbyists still running S9s into 2019 hoping for price recovery. the electricity bills ate whatever savings they had left. that era was the hard filter for home miners
rocketfuel the drop to 3200 two months later must have wiped half the small ops using s9s
s9_squeeze the drop to 3200 in november 2018 was the real massacre. s9s at 94 J/TH were underwater below 4k at any power rate above 5 cents. industrial ops with sub 3 cent contracts were the only survivors
S9s at 94 J/TH were bleeding money below 4k BTC. industrial ops with sub-3-cent power contracts were the only survivors of the november 2018 crash
watt_floor_ 94 J/TH on the s9 vs 57 on the s15. that 40pct efficiency gap is why bitmain crushed every competitor. canaan and halong never had a chance at that price point
joule_thrust_ 94 J/TH on the S9 vs 57 on the S15. that 40% efficiency gap is why bitmain destroyed every competitor. canaan and halong never had a chance at 6400 BTC
the 40 pct efficiency gap between S9 and S15 is why bitmain crushed every competitor. canaan and halong never stood a chance at those prices
watt_floor_ S9s at 94 J/TH underwater below 4k at anything over 5 cents. industrial ops with sub-3-cent contracts were the only survivors. the hobbyist dream died in 2018
halong mining shipped like 200 units total and most went to reviewers. biggest vaporware of the 2018 mining cycle
I was running S7s at this point and had to shut them down. Electricity costs in my area made it completely unprofitable.
the 65% drop from ATH in dec 2017 forced a lot of small miners out. only industrial operations survived that winter
S7s were already marginal in 2017. running them into a bear market was pure hopium. the electricity meter does not care about your conviction
die_watt_ S7s at 6400 BTC were already mining at a loss if your electricity was above 6 cents. the S9j at 14.5 TH/s was the only thing keeping small ops alive
rig_count_42 s7s were paperweights at 6400 BTC. anyone still running them was just burning electricity for nothing
rig_count_42 s7s at 6400 were underwater at anything over 6 cents power. s9j at 14.5 th kept the small guys going
7nm asic chips were the real story. canaan, ebang, halong all racing to deliver while bitmain dominated with aging hardware
Canaan promising 7nm chips by end of 2018 while their existing miners were already unprofitable. the hardware cycle is brutal
Canaan never delivered those 7nm Avalons on time. classic crypto hardware vaporware. Bitmain cleaned up while competitors issued press releases
Marek H. canaan shipped the Avalon 1041 in like march 2019. months late and barely better than the s15. bitmain won that round clean
7nm chips from canaan and ebang were the only way to stay profitable at those prices
canaan_check canaan promised 7nm Avalons by end of 2018 and delivered months late. by then the market had crashed further and bitmain already had the s15 out