Bitcoin Mining’s New Bidding War

The Takeaway

  • As bitcoin’s price edges up, secondhand mining equipment is becoming more profitable to run
  • As a result, the price of used miners has nearly doubled in recent weeks, to $250-$320 for old Bitmain Antminers
  • Somewhere between 220,000 and 700,000 mining units could come online this summer
  • Newer, more powerful models won’t be shipped for months and take longer to pay for themselves

The cost of secondhand cryptocurrency mining equipment in China has nearly doubled in recent weeks as a result of bitcoin’s price jump over the same period.

The bull run that began in mid-April has made these machines more profitable to run – and hence more valuable. According to blockchain data firm TokenInsight, as recently as April 8, an investment in most types of crypto mining equipment would take 200 to 350 days to pay for itself.

But bitcoin’s climb from the low $4,000 range in early April to well above $5,000 has resulted in a drop in the payback period (a miner’s price divided by its daily profit) for several secondhand models to less than 200 days. 

“When the payback period is apparently below 200 days, it has made more miners feel there’s an opportunity,” said Michael Zhong, a mining analyst at TokenInsight. “That further incentivizes their buying demand for secondhand models and leads to a price jump and will bring the payback period back above 200 days again.”

This market change is having an impact on businesspeople like Darius Sharif Samani, an independent miner who owns machines in China and brokers equipment sales. When he started asking around in March, Samani managed to buy secondhand AntMiner S9 units for $140, he told CoinDesk. Made by mining giant Bitmain, these machines can run computations at a speed of 14 terahashes per second, or TH/S.

Since then, the price for the same machine has jumped to at least above $250, and it would cost more than $280 to buy an advanced version of the AntMiner S9 that generates 14.5…

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