'ASIC Financing' Is Driving Down Bitcoin Mining Profitability

Bitcoin mining profitability is in the basement, seeing all-time lows in 2020.

Conversely, bitcoin's hashrate has surged throughout 2020, propelled in part by mining farms financing new hardware to boost their operations.

Bitcoin mining profits have been rock bottom in 2020.

According to North American bitcoin mining company Luxor's hashprice index, miners are extracting $0.096 for every terahash they produce.

Bitcoin mining is a resource war of attrition, so naturally revenue margins are dwindling in a year when Bitcoin's hashrate is exploding.

Luxor Mining pool operator Ethan Vera told CoinDesk the anemic miner revenue is a direct result of the Bitcoin system's growing hashrate, its relatively stagnant price and lower-than-usual transaction fees.

Much of this growth comes from ASIC financing, wherein miners take out loans to buy the best new-generation mining equipment.

Just a year or so ago, the common rate was 20%. "A number of North American companies have been in the news recently for large hardware purchases, particularly RIOT Blockchain and Bitfarms. Foundry has also popped up recently and offering financing options for ASIC miners," Thomas Heller, the COO of mining media firm HASHR8, told CoinDesk.

Stephen Barbour, whose company, Upstream Data, provides oil drillers with mining rigs that run on vented natural gas, sees this as detrimental to Bitcoin mining's short-to-near-term health.

Per "Moore's Law", which stipulates that computer processing improves exponentially, ASIC mining hardware will continue to improve towards maximum efficiency.