Over the past 12 months, Bitcoin mining has been very tough to earn a profit. There were several months where the profit was zero and even approached negative territory but we pressed on mining and keeping the machines running because of our power contracts and commitments to pay out (no matter how small this daily profit became)
We pushed through the bottom of this market and we survived it!
However, in doing so we lost some key facilities and partners along the way. We had to renegotiate power contracts that were either expiring or just not profitable to keep running. This put us in a really tough position overall and we are doing everything we can right now to keep machines running and our pool growing.
During the last 90 days, we have actually added a lot of new power the pool, however, we’ve been forced to shut down some machines that are no longer profitable and we have stopped some of the replacement maintenance on machines that are dying on us. The net effect has been very minimal on the pool but it has allowed us to make more profit by shifting things around.
At this time we still have around 600 PH that is either sitting cold or has never been deployed due to poor market conditions. We are hoping we can get these back into good situations over the next few months and continue expanding up from there.
Also, with the BTC price moving up it should increase the per share value of each mining share and increase the daily payouts. This will be seen in a few weeks after we pay the June power bills and begin mining in a better situation. We have to pay all of our bills up front to secure power for the month so there will be a lag, plus the normal 10-day lag that we have on the share payouts.
The Future of Mining… We believe there is a big future in mining but right now is a very pivotal time for our pool because for the first time in many years there are new chips hitting the market that threaten to make our current equipment obsolete. We have dealt with this situation before many times when we moved from the S3 to the S4, then the S4 to S5, and the S5 to the S7 and finally again from the S7 to S9 machines.
Luckily with the S9’s there was nothing better that came along for many years and we were fortunate to load up on these machines as the bulk of our current inventory. This was one of the main reasons we saw such incredible gains as we deployed the most profitable machines in the most profitable data centers.
However, now there are many new chips coming out this year to compete with the S9’s and most of them are being deployed right now! We believe the S9’s have another 6-12 month window before they are no longer profitable (unless Bitcoin goes really crazy from here).
For BitClub Network this time around is much different than our previous hardware upgrades because we now have hundreds of thousands of S9 machines and turning them over to buy these new chips may not be easy (or even feasible on this scale). We have already begun the process and this time around we will unplug them once they are no longer profitable to run.
We have always said from the beginning that once mining is no longer profitable we will stop selling new mining contracts and all the existing contracts would continue on as long as there was profit to be made. Don’t worry we are not at this point, but we wanted to let you know that turning over these machines for the newer chips may push us to the edge and require us to stop selling.
We are doing everything we can right now to get the latest hardware and deploy as much as we possible but our sales at the current level will simply not support the next round of hardware.
At this point, it all depends on our timing in being able to liquidate older machines, lock down cheap power and deploy. This also depends on the BTC market price and the overall mining sales revenue. If we hit this round perfectly as we did back in 2016 then this runs up maybe even better than the last one because most experts agree these latest chips are the very top of the mountain and if we load up on them we should see profits for many years to come.
Either way we wanted to let you know the situation because we are all in the same boat. Our members have proven to be resilient and we faced this same issue in late 2015 when mining was declared dead and our contracts were very unprofitable. We don’t know what will happen this time around but it seems very familiar and just know that all of us on the corporate side will do everything we can to keep mining for as long as we can.
-BCN Support Team