Bitcoin's mining network processed over 40 exahashes per second in June 2018, crushing the roughly 13 EH/s record from 2017 by more than double. Four months brought growth exceeding 100 percent. For m
Bitcoin's mining network processed over 40 exahashes per second in June 2018, crushing the roughly 13 EH/s record from 2017 by more than double. Four months brought growth exceeding 100 percent. For mining companies, the surge means constant equipment upgrades are now mandatory to maintain any profit margin as difficulty keeps climbing.
The pattern stems from price action. Bitcoin's rally in late 2017 improved mining returns and prompted operators to order new gear. But hardware doesn't deploy instantly. Miners need months to build facilities and get equipment running, and they hunt for cheap electricity available only in scattered locations. This delay between price recovery and hashrate expansion reflects the unglamorous reality of construction timelines and site selection.
The new computing power that came online since 2017 ended represents approximately 2 million of the highest-spec SHA-256 mining chips. At $1800 per unit and accounting for bulk purchase discounts, this translates to over $4 billion in new mining rigs added to secure the network. Other equipment classes exist. Bitfury manufactures BlockBox containers, turnkey mining units using custom ASIC chips rated for about 8 petahashes per second each. A single unit carries a $1 million price tag, limiting buyers to major players.
Bitfury CEO Valery Vavilov put his company's mining market share at 10 to 12 percent. Hut 8 Mining runs 33 BlockBox units from an Alberta facility producing some 255.5 petahashes per second, with plans to add more equipment by September 2018.
This surge follows a long trajectory. A May 2018 CoinShares analysis of mining found hashrate tripling every year across the prior four and a half years, paired with steady improvements in chip efficiency and hardware design. The same study pegged the average production cost at $6,400 per bitcoin.
Mining profitability hinges on electricity. Operators position themselves near power stations selling bulk electricity cheaply, which narrows their geographic options. Bitmex researchers traced China's mining dominance to excess power capacity in the aluminum sector. Small hydroelectric plants across rural China generate more power than transmission lines can route to population centers. Miners capture this surplus at steep discounts. Bitmain's Ordos operation runs on coal, but CoinShares noted hydro sources supply most of the industry's power globally.
The CoinShares research said: "The cheapest electricity in the world is in many cases stranded hydro power and Bitcoin miners have shown a strong will and ability to seek out the cheapest possible sources, wherever they may be. While much of the industry has been confined to China in the last few years, we are now observing a large number of mines constructed across a much wider geographical spread."
Mining is now moving into Canada, Norway, and Washington State, where cold climates reduce the expense of cooling mining rigs. Quebec marketed itself as a mining destination but authorities are now hesitant. HydroQuebec fielded power requests exceeding 17,000 megawatts from prospective miners. Officials are considering a 500 megawatt cap on mining demand.
Pinpointing exact hashrate figures proves impossible. Researchers estimate it by studying expected block times, current network difficulty, and actual time elapsed between blocks. Most mining calculations demand assumptions, many detailed in the CoinShares whitepaper's technical appendices.
The mining sector shows strength. Large, capitalized firms are positioned to harness low-cost electricity anywhere in the world. Hardware competition intensifies margins, driving equipment prices lower and widening the profit window for miners who secure cheap power.
