Chinese Bitcoin Miners Face Tougher Than Ever Rainy Season in 2020

This year is different, proving to be harder than ever for China's bitcoin miners and mining farm operators who are estimated to dominate 65% of the global multi-billion dollar bitcoin mining industry.

Mining difficulty has now almost doubled compared to the monsoon season last year, while block rewards have halved, meaning it is more difficult to mine, with less rewards.

Many miners expected bitcoin's price to rise sharply after the halving, said Kevin Pan, CEO and co-founder of the China-based PoolIn, one of the two biggest bitcoin mining pools in the world.

Without a significant price breakout, bitcoin miner's daily revenue has dropped by 70% compared to last year, said Pan, although the recent bitcoin price jump has helped improving the situation.

A surge in interest and investment in bitcoin mining since last year have led to a surplus of newly constructed mining facilities in China.

To be clear, bitcoin miners and mining farms can still make a profit.

A payback period of six months to a year used to be common for bitcoin miners in China, but if bitcoin maintains its current prices around $11,000, that could be extended to as long as two years.

"In the eyes of many old Chinese miners, the electricity price right now is not only lower than the similar situation of the halving and hydro season in 2016, but also even lower than the electricity prices during the 2015 bear market," said Heller of F2Pool.

In contrast to previous crypto loans that require borrowers to pledge bitcoin as collateral, this new partnership accepts debtors' miners hosted at HashAge and Heng Jia as collateral.

Luxor, a U.S.-based mining pool, rolled out a bitcoin hashrate price index earlier last month in an effort to provide better transparency into the traditionally opaque market of how much bitcoin mining equipment is changing hands.