Blockspace is a whopping .5 sat/vbyte. At night that’s 500$ a block in fees or 3k usd per hour. 3k per hour is all there is, in the entire world, in terms of demand for blockspace and ultimately miner rewards.
How much hashrate will 3k per hour pay for? Or 72k per day?
One thing to remember about hashrate, it is artificially boosted by tax policy (ie. bonus depreciation). Investors are buying miners because they can depreciate 100% of the cost immediately, effectively reducing (or in some cases eliminating) their tax bill.
Imagine I said to you, you can either pay a $50K tax bill to the gov and get nothing in return, or you can spend $100k and have no tax but own 10 miners which may earn you $65k over next 3 years....from your perspective its a pretty easy choice: Spent 50K or spend 35k...
This is the crucial thing that most miss: Because of this new depreciation scheme, miners don't care about net profit of their mining equipment. They only care about the offset to their tax bill....meaning its not spending 100K and hoping to earn some percentage over that. Its spending a 100k and earning just enough back to offset their tax bill, so maybe only earning back 65% is still "profitable" from a net tax perspective.
One thing to remember about hashrate, it is artificially boosted by tax policy (ie. bonus depreciation). Investors are buying miners because they can depreciate 100% of the cost immediately, effectively reducing (or in some cases eliminating) their tax bill.
Imagine I said to you, you can either pay a $50K tax bill to the gov and get nothing in return, or you can spend $100k and have no tax but own 10 miners which may earn you $65k over next 3 years....from your perspective its a pretty easy choice: Spent 50K or spend 35k...
This is the crucial thing that most miss: Because of this new depreciation scheme, miners don't care about net profit of their mining equipment. They only care about the offset to their tax bill....meaning its not spending 100K and hoping to earn some percentage over that. Its spending a 100k and earning just enough back to offset their tax bill, so maybe only earning back 65% is still "profitable" from a net tax perspective.