For the past nine months, I have been providing analysis on some of the larger North American listed Bitcoin mining companies. This analysis has been produced with the support of the mining companies providing monthly updates of their progress. Generally, the mining update will include most of the following:
- Amount of Bitcoin (BTC) and Ethereum (ETH) produced in a month
- Reasons for any low production (i.e. curtailment, software upgrades, etc.)
- The total Bitcoin currently held (hodl’d) on account
- The current hashrate of a miner
- Current and future growth of hashrate and power
To enable a fair comparison between the miners' production, a common metric is needed. The simplest metric to use is the amount of Bitcoin produced by one exahash per second (EH/s) of hashrate. This metric enables a comparison of production output for each miner.
In the table below, highlighting May 2022 Bitcoin production, Iris Energy (IREN) produced 151 Bitcoin with an average hashrate of 1.165 EH/s. This number is then converted to Bitcoin mined per EH/s using the following formula:
1000/Average Bitcoin Hashrate x Bitcoin mined in month = Bitcoin per 1 EH/s
Using Iris Energy May 2022 numbers we find:
1000/1165 x 151 = 129.62 Bitcoin per EH/s
Only Iris Energy and Digihost Technology (DGHI) actually highlight the average hashrate used in a month in their updates. To enable a fair comparison using an average hashrate, the previous month hash rate is added to the current month and then divided by two. This method will assume that a miner who has increased or even reduced hash rate has done so, in a linear manner, throughout the month.
It's important for the miners to consider how they provide the monthly updates. Some may be drawn to highlighting to the market and shareholders their increased hashrate at the expense of providing a much lower actual average hashrate due to a number of reasons. For example, some companies may install miners throughout the month and then switch the power on during the last few days, thereby making the average hashrate less accurate.
Another table I use to highlight Bitcoin Miner production is the monthly table that will take a year to date or maybe a period, six, nine or 12 month data, using the monthly Bitcoin by EH/s rate for each miner. What this table highlights is the miners who consistently provide transparent monthly Bitcoin production updates. By adding the total Bitcoin mined by EH/s for each month will provide a total for the period. The miner achieving the highest total in the period is ranked as one. The remaining miners are ranked in the order of total.
I have also created a column to highlight the percentage (%), by which each miners’ production compares to the miner ranked one. In this case, Iris Energy achieved the highest ranking for the period January 2022 to May 2022 and was the most consistent performer over this period. Effectively, Argo Blockchain (ARBK, ARB.L) at 64.47% would need to increase its production in excess of 50% to achieve a similar amount of Bitcoin by EH/s.
Bitcoin mined per EH/s is only one metric and should not be used in isolation when carrying out due diligence on a particular miner. Having spoken with many public mining CEOs, however, the metric is certainly one paid attention too.