Miner Weekly: Difficulty ATH? Plus GMO vs Whinstone case
Expecting a big difficulty jump next week — it might just be the biggest this year.
It's been a slow news week in the mining world — but not for hashrate. The current bitcoin difficulty is 28.35T – 10.2% behind the previous high at 31.25T. But the average block interval since the last retarget (749,952) on Aug 18 reaches 9.1 minutes. We may see a difficulty jump doozy enough to set a new (or close to new) ATH in a few days. It's great for the network security but unfortunately also means declining hashprice, especially with bitcoin's price drop following Powell’s speech on Friday. If you recall our last issue, the average cost of mining has gone up by 22% in Q2. Brace for tougher weeks ahead as profitability gets squeezed!
In addition, we found the court records of a lawsuit that somewhat went unnoticed between GMO Internet and Whinstone, the colocation provider acquired by Riot last year. For a high-level recap of the disputes, check out our Tweet thread below. Here, we want to point out some interesting nuggets about GMO and Whinstone based on our research.
Long story short is that the bear market is really crashing those with inefficient mining fleets.
Why is the case relevant? Well, Whinstone claims to be the single largest colocation provider in North America. Riot's June presentation indicated about 200MW hosting capacity in operation. Riot also specified in its Q2 filing that three clients alone accounted for "nearly all" of its data center hosting revenue. The three likely referred to GMO Internet, SBI Holdings and Rhodium Enterprises, based on public information.
GMO alleged in its legal complaint that Whinstone invoiced energy bills this year with an unexpected surcharge of $0.0015/kWh, which would increase its monthly cost by about $50,000. Whinstone counterclaimed that GMO was causing a damage to Whinstone at $42,000/month by not paying the surcharge.
In any case, some quick math here would give us an estimated power draw of ~40MW by GMO, roughly 20% of Whinstone's hosting capacity.
Meanwhile, GMO told shareholders in Q2 that its hashrate as of June 30 was 300 PH/s, down from 500 PH/s earlier this year. This suggests much of GMO's mining fleet consists of very old equipment with an average efficiency between 80 to 100 J/TH. That may explain why even a surcharge of $0.0015/kWh could put existential pressure on GMO.
Regulation
BitRiver Loses Another Client as SBI Crypto Leaves: Sources — www.coindesk.com
The Japanese bank is at least the second big name to emerge as ceasing work with BitRiver after the U.S. sanction in April.
Official Says Nearly 10,000 Crypto Mining Devices Seized In Iran — www.rferl.org
Authorities have announced the seizure of 10,000 illegal crypto mining devices in Tehran since April.
Hardware
Argo Slashes Hash Rate Growth Estimate by 42% — www.theblock.co
Argo now expects to reach 3.2 EH/s by the end of 2022 — down almost 42% from previous targets.
Nvidia’s Crypto Mining Chip Revenue Continues to Fall — www.coindesk.com
Sales of Nvidia’s crypto mining processor were deemed “nominal” for the second straight quarter.
Finance
Argo Blockchain Looks to Raise $25M-$35M For 4.1 EH/s Target — www.coindesk.com The firm is also looking to sign a deal for power in the next few months to avoid paying spot prices.
Marathon Digital Targets Trimmed by Cowen — www.coindesk.com The bank did lift its share price target to $9, but that remains below the stock's current level of about $14.
Infrastructure
Celsius Spent $40M on Crypto Mining in First Two Weeks of Bankruptcy — www.wsj.com
Celsius expects the mining facility to turn a profit by January, CFO says.
General & Features
The Future of Bitcoin Mining and the Environment — www.youtube.com
VICE's Crypto Land segment produced a new multi-media story on bitcoin mining.
Watch: Impact of Crypto Winter on Bitcoin Miners — www.bloomberg.com
Iris Energy and Eaglebrook Advisors Board Member Mike Alfred joins Kailey Leinz to discuss the state of the bitcoin mining industry.