July 2023 was an upward month for Bitcoin mining, both in terms of hashrate and miner revenue.
In particular, Bitcoin hashrate set new all-time highs.
Bitcoin’s hashrate
July 2023 saw the highest ever peak in Bitcoin hashrate
It occurred on Saturday 8 July, when it exceeded 500 Eh/s for the first time in history.
To provide a comparison, a year ago the weekly average was 200.
That peak occurred in only a few hours on 8 July, and given that it is only an estimate, it is a number that should be taken with caution.
By taking weekly averages, which are a more conservative estimate, the peak occurred on 11 July at 410 Eh/s. That’s still more than twice as high as a year ago.
On the other hand, as far as daily averages are concerned, the all-time record belongs to 8 July with 465 Eh/s.
It is worth noting that even the difficulty recorded its all-time high in July, partly because as the hashrate increases inevitably so does the difficulty.
It is no coincidence that the difficulty peak was reached on 12 July, shortly after the hashrate records, since the difficulty only updates once every two weeks or so. After approaching 60T, it then dropped below 54T at the end of the month due to the inevitable hashrate contraction.
Profits
The curious thing is that despite the increase in difficulty, the profits for the miners increased.
Generally, when difficulty increases, the costs for the miners also increase. And since, overall, revenues are fairly stable, an increase in difficulty tends to reduce profits.
What’s more, compared to $0.07 per day per Th/s in June, Bitcoin mining profitability rose to almost $0.08 in July.
Indeed, revenues have actually increased as well.
Overall, the miners in July collected $844.5 million, which is almost $61 million more than in June.
It is worth mentioning that July has an extra month, so even for that alone the overall monthly receipts should be 3% higher. However, in July the increase in total receipts for Bitcoin miners was 7%.
The total of $844.5 million is made up of $18.8 million from fees, and the rest from block rewards. So it is clear that the increase is not due to higher fees collected, but simply to a higher market value of BTC in July than in June.
After all, in June the average price of BTC was well below $30,000, while in July it was more or less around that threshold.
In other words, Bitcoin mining during this period is doing quite well.
The absolute low in recent years in terms of the profitability of Bitcoin mining was reached between November and December 2022, when the price of BTC was around $16,000. It is worth noting that it was around $0.06 per Th/s per day, compared to almost $0.08 today. Thus, not even in that dark time did Bitcoin mining ever take a big risk.
Energy consumption
December also saw the lowest peak in estimated global energy consumption in Bitcoin mining.
The estimate of total annual consumption in December had dropped to 70 TWh, but by March it was back above 100. In July it even briefly exceeded 110 TWh, but on average that estimate remained between 100 and 110.
The peak in consumption was reached in December 2021, which was shortly after the peak of the last big bullrun, when it exceeded 200 TWh. Thus, excluding the minimum peak in December 2022, it can be said that since the maximum peak, Bitcoin’s energy consumption has halved.
Before the start of the latest big bull run it was about 80 TWh, so it has not increased by much since then.
It is important not to forget that the energy consumption of Bitcoin mining is neither fixed nor established in advance. It is the miners who arbitrarily choose how much to consume.
However, since mining is a competition in which whoever mines the most hashes wins, it is inevitable that the miners will be inclined to consume as much as possible, but always at a lower cost than the revenue, because they do not mine at a loss.
Therefore, when the market value of the mined BTC increases, they can afford to increase their mining costs as well, and thus their energy consumption, but if the price falls then they must necessarily also reduce consumption.