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- China’s crackdown on cryptocurrency mining gave miners outside the region tremendous opportunities for growth.
- Second-quarter earnings reveal that non-Chinese mining firms crushed revenues and produced more bitcoin during the quarter.
- The CEO of one firm said his market share grew in the quarter as a direct result of the China crypto mining ban.
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China’s crackdown on the cryptocurrency industry gave miners outside the region tremendous opportunities for growth – and the earnings and production updates from publicly listed firms are starting to reflect that.
Insider previously reported that North American mining firms were expecting to see a surge in demand for facility hosting space and a boost in profit from taking up a larger portion of the bitcoin network hashrate, or measure of computing power being contributed to the network through mining, as Chinese miners went offline.
Although recently released second quarter earnings only encompass about 30 days of operations after the ban, they give a look into the state of mining as China’s market share diffuses across the globe.
In the second quarter of 2021, Canadian mining firm Bitfarms saw its revenue jump 29% quarter over quarter. It also mined 26% more bitcoins that the previous quarter. In July alone, Bitfarms mined 391 new bitcoin, its largest monthly production rate for the year.
Bitfarms CEO Emiliano Grodzki said the China crypto-mining ban and the resultant shutdown of almost 50% of the network hash rate allowed his firm to increase its market share to above 1.5% from less than 1% at the beginning of 2021.
“In addition, the China ban enables us to procure miners more competitively than we have in the past and to leverage our infrastructure development and operating capabilities to further support our ambitious plans for expansion,” said Grodzki. “We are very excited about the months ahead.”
There’s only a set number of bitcoins that are mined each day, so as miners move offline, those that are still operating earn a larger slice of the pie. The Block Crypto reported that Riot, Marathon, Bitfarms, Hut8, and Argo Blockchain produced on average 58% more bitcoin during the month of July than in June.
“The decrease in active miners in China decreased the global hashrate, which did positively impact the number of blocks we won,” Marathon Digital Holdings CEO Fred Thiel told Insider. In the second quarter, the US-based company also increased its revenue by 220% from the previous quarter to $29.3 million.
Meanwhile, Riot Blockchain increased mining revenue by 35% quarter-over-quarter to a record $31.5 million in the most recent quarter.
Marathon Digital Holdings also increased its hash rate, or the total amount of computing power it dedicates to mining bitcoin, by 196% in the second quarter of 2021, however Thiel said that is due to the company’s fleet size, not the ban.
The hashrate increases for many North American companies and positive earnings were propelled by other factors apart from the China ban as well, including the fact that many firms were already gearing up to expand their facility spaces and procure more hardware, Zack Voell, Compass Mining director of research, told Insider.
In fact, data from the Cambridge Electricity Index reveals that the US started sweeping up portions of the hashrate even before June, when China ordered mining to be shut down.
Riot, for example, credited a large portion of its revenue boost to the fact that it deployed an additional number of high efficiency mining rigs during the quarter.
The success of the mining firms as late can also be seen in their staggering year-to-date price gains. London-based Argo Blockchain is up 306%, followed by Marathon at 268%, Bitfarms (210%), Riot (126%), and Hut8 (180%).
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