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.