Bitcoin Is Most Institutionally Investable Crypto, as BTC Mining Margins Stay Strong Despite Market Uncertainty: Report


The team at BitOoda, an international digital asset financial technology & services platform providing next-gen risk management solutions, best-execution brokerage & expert market analysis, notes in a recent crypto market update that Bitcoin (BTC) dropped around 5.1% WoW, settling at $46,187 “as of midnight UTC on 9/8.”

The BTC price had steadily climbed, and also began to show considerable strength beyond the $50,000 mark for several days before the recent dip. There “appears to be a bit of sell-the-news going on, with an initial catalyst being El Salvador’s adoption of Bitcoin as legal tender,” the BitOoda team noted in their report, dated September 9, 2021.

These developments have been followed by news that the US Securities and Exchange Commission (SEC) has sent a Wells notice to digital assets firm Coinbase.

The BitOoda team pointed out that their past experiences with Wells notices in their equity research coverage universe “suggest that at minimum this may prove a distraction for management that could take several quarters to resolve.”

The company added that more generally, this is “emblematic of accelerating regulatory scrutiny of the crypto space that could refocus investor interest on Bitcoin and away from altcoins.”

The firm also noted that while the US regulatory posture on Bitcoin is “far from settled,” the Commodity Futures Trading Commission’s (CFTC) view of Bitcoin “as a commodity and the availability of compliant products on the CME position Bitcoin well for institutional investors seeking exposure to the asset class.”

As stated in the report from BitOoda, the total BTC earnings per PH/s “are ~6.94 mBTC, down from ~7.28 mBTC / PH/s last week on Tuesday’s reset (1mBTC or milliBTC = 1/1000 BTC), when difficulty rose ~4.5%. ”

The report also mentioned that the target Hashrate (or amount of computing power securing BTC network) is “now ~132 EH/s, while the current observed Hashrate is about 136 EH/s.” Transaction fees “dropped 34 bps WoW to 1.6% of miner rewards, or 0.10 BTC per block, with only 7,000 pending transactions in the ‘Mempool,’” the report added.

As noted in the update, Bitcoin mining revenue “dropped to $321 / PH/s per day and $350/MWh following the difficulty reset, along with spot and power price decreases.”

The BitOoda North American Hash Spread™ “dropped 9.8% from $349 to $315. This rise can be attributed to “average national power prices falling slightly compounded with spot losses.” As previously reported, the BitOoda Hash Spread™ is defined “as the difference between the cost of power per MWh and the Bitcoin mining revenue per MWh.”

This gives miners “a quick sense of the surplus generated by their business to cover personnel, overhead, depreciation, and profit,” the report explained. The weighted average “around the clock U.S. wholesale industrial power price (5 markets) of $34.81 / MWh leads to an aggregate spread of $315,” the report revealed.

The report further noted that the older-gen S9-class devices “saw their Hash Spread™ down ~11% to $64/MWh. S17-class devices, the bulk of the installed base, saw a hash spread of about $221/ MWh.” The report also revealed that the “132 MWh required to mine 1 BTC with S19-class rigs (up 5MWh since last week) translates into $4,597 in power expense.”

As of September 9, it “costs $16,340 using S9 rigs, a ~65% margin, excluding labor.” Thus, power costs “range from 10–40% of revenue, depending on the hardware generation in use.”

As noted in the update:

“Current Bitcoin price allows strong margins capable of absorbing spot and power price fluctuations, even using older-gen S9 rigs. Direct labor costs in the US equate to about $7–10 per MWh at scale, but significantly more for small operations that still need to staff for just a few MW of capacity.”

The main takeaways from the BitOoda report are as follows:

  • Regulatory scrutiny “underscores our view that Bitcoin is the most institutionally investable crypto-asset”;
  • “While distracting for incumbents such as Coinbase, regulations are a critical element in the maturation of the overall landscape and the broader evolution of the digital asset ecosystem”;
  • “Mining margins remain strong, though lower than before the last difficulty reset”;
  • “[BitOoda] assess this presents an opportunity for US-based miners to gain share and acquire capacity and new hosting customers at attractive term.”





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