Bitmain's Bitcoin Mining Hashrate Drops 88% in “Natural Course of the Mining Business”

Beijing-headquartered Chinese cryptocurrency mining giant Bitmain Technologies, one of the largest crypto mining hardware manufacturers in the world, has recently seen its bitcoin mining hashrate drop by a whopping 88%.

The noticeable drop was revealed through a hashing power disclosure the company releases every month. As of May 7, Bitmain’s hashrate running the SHA-256 algorithm – which both bitcoin and bitcoin cash are based on – dropping from 2,072 PH/s to just 237.29 PH/s.

The company notably manufactures equipment that it sells to others, but uses some of its machines to mine for itself. Bitmain reportedly started disclosing its hashrate back in July of last year, at a time in which it had slightly less than 1,700 PH/s. Its hashrate increased to 2,339 PH/S by October of last year, but then dropped to less than 1,700 PH/s.

This drop occurred in March and coincided with an overall decline in the Bitcoin network’s total hashrate, a decline seen since November of last year when BTC’s price dropped to less than $4,000. Bitmain’s hashrate then climbed again in April, before seeing the 88% drop.

The drop saw Bitmain’s share of the Bitcoin network’s total hashrate drop from 4% to 0.4%, at a time in which bitcoin’s price has been recovering, so much saw it recently moved over the $6,000 mark, according to CryptoCompare data.

The hashrate drop also comes at a time in which miners in China are gearing up to take advantage of the coming rainy season’s cheap hydroelectric power. In March, it was reported Bitmain was set to deploy 100,000 ASIC machines to mine using hydropower.

Speaking to CoinDesk, a Bitmain spokesperson didn’t reveal exactly why the firm’s hashrate decreased, but stated:

It is [in the] natural course of the mining business where the hash rate owned by one body at one instant may be owned by someone else at another instant

This statement could be related to Bitmain’s cloud mining service, BitDeer, which rents some of its flagship AntMiner machines to retail customers. On its website, most mining contracts are sold-out. It’s also possible Bitmain has been renting its hardware to other companies.

Bitfinex Wants to Offer 100x Leverage For Crypto Derivatives Trading

Michael LaVere
  • Bitfinex will offer 100x leverage trading for cryptocurrency derivatives
  • According to the exchange's CTO, the hedging product is "ready for prime time"

Cryptocurrency exchange Bitfinex revealed it wants to offer derivatives products with up to 100x leverage for cryptocurrency traders. 

Hedging On Cryptocurrency Derivatives

Chief Technology Officer Paolo Ardoino told The Block on June 25 that the cryptocurrency exchange was ready to ship a 100x leverage product for certain users. According to the post, the project has been under development for some time and is “now ready for prime time.” 

The product was referenced in last month’s whitepaper published by Bitfinex for its $1 billion private token sale of LEO, stating

“Qualified Bitfinex account holders will be able to trade a new hedging product through a derivatives wallet.”

The whitepaper originally claimed that the new hedging mechanism would be released by the end of June, a timetable that fits with Ardoino’s “ready for prime time” statement. 

Ardoino confirmed that only “verified” customers will be allowed access to the product, given the risks involved in such highly leveraged trades. 

The CTO also took to Twitter to quell user concerns over Bitfinex’s existing 3.3x margin trading. Ardoino explained 100x leverage will be “optional,” and that their current leveraged trading products will be unaffected by the release. 

Big Risk, Big Reward

Bitfinex is looking to compete with rival exchange BitMEX, who already offers 100x leverage through its bitcoin perpetual swap contract. However, Bitfinex claims its product is designed as a legitimate hedging tool for clients, rather than a gambling mechanism. 

Max Boonen, CEO of trading firm B2C2, believes the product will only appeal to retail hedgers, as large investors will shy away from the risks involved in 100x trading. 

According to Boonen, 

“There’s nothing wrong inherently about 100x. But as a commercial hedger you want lower leverage margin. The larger investor wouldn’t want to take the risk of 100X, typically. They don’t want to go balls to the wall.”

The cryptocurrency derivatives market has been heating up. Last week bitcoin-bull Mike Novogratz’s Galaxy Digital announced plans to offer cryptocurrency options contracts.

Binance has also reportedly been exploring futures trading. On June 24, Binance CEO Changpeng Zhao tweeted the exchange had executed its first margin liquidation for a BTC short.