The mining sector experienced several major developments, with Bitcoin completing its third halving and Ethereum mining entering a rapid growth phase. These two networks now form the backbone of the crypto mining industry.
This analysis provides a comprehensive overview of the mining landscape, covering energy consumption, revenue, network metrics, and the major players involved.
Key Industry Metrics and Energy Consumption
The total energy consumption of the Bitcoin network is a key indicator of its scale. Estimates place its highest annual energy usage at approximately 77.78 TWh, comparable to the total energy consumption of Chile. The lowest estimated consumption was around 56.58 TWh, with a brief dip following the halving before recovering in early June.
Ethereum mining saw explosive growth, largely driven by the DeFi boom. Its estimated energy consumption surged from 8.11 TWh at the start of the year to 14.64 TWh by year's end—an increase of roughly 80.52%. At its peak, Ethereum's energy use was about one-fifth that of Bitcoin's, similar to the total energy consumption of Tunisia.
This growth in energy usage directly correlates with the total output value of the two mining sectors. The Bitcoin mining industry generated an estimated $5.012 billion in revenue, a slight decrease of 3.78% from the previous year, essentially remaining flat. In contrast, Ethereum mining revenue soared to approximately $2.69 billion.
A notable event occurred in August and September. During the peak of DeFi's liquidity mining frenzy, Ethereum's monthly mining revenue temporarily surpassed Bitcoin's. In September, Ethereum miners earned an estimated $489 million, which was $162 million (or 48.98%) more than Bitcoin miners earned that same month. This highlights the significant revenue potential within the Ethereum ecosystem.
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Breakdown of Mining Revenue: Block Rewards vs. Fees
The revenue for both Bitcoin and Ethereum miners comes from two primary sources: block rewards and transaction fees. However, their reliance on each source differs significantly.
In 2020, Bitcoin mining fees totaled about $326 million, a massive 108.97% increase from 2019. The halving event served as a clear dividing line. After the halving, the average daily transaction fee was approximately $1.2445 million, about 4.75 times higher than before. Consequently, the proportion of fee revenue to total mining income grew from an average of 2.8% in 2019 to 6.69% in 2020.
Ethereum's fee economy was even more substantial. Total fees reached $631 million for the year, with dramatic growth throughout 2020. The third quarter, in particular, saw network congestion from DeFi activity drive fees sharply higher. The share of fee revenue relative to total miner income jumped from 17.34% at the start of the quarter to 30.05% by the end. On average, fees constituted 16.06% of all Ethereum mining revenue in 2020—nearly 10 percentage points higher than Bitcoin's fee share.
Looking ahead, if Bitcoin's network conditions remain stable with gradually increasing hash rate but stable transaction counts, fee revenue will continue to be a crucial factor for improving miners' profit margins. For Ethereum, the future of fee revenue largely depends on the adoption of Layer 2 scaling solutions. A successful migration of major DeFi applications to Layer 2 could help stabilize or even reduce transaction costs.
Increasing Mining Difficulty and the Potential for Excess Returns
Network difficulty adjustments are a direct response to changes in computational power. The classic cycle is: rising coin price → increasing hash rate → rising mining difficulty.
The Bitcoin network adjusted its mining difficulty 28 times throughout the year. Of these, 17 were upward adjustments. The largest single increase occurred on June 16th, a jump of 14.95%. The cumulative annual increase in difficulty was 43.79%, a much more moderate pace compared to 2019's 97.67% increase.
Ethereum's mining difficulty saw an even sharper rise, increasing by approximately 52.20% over the year. This is a stark contrast to 2019, which saw only a 5.32% increase.
Bitcoin's hash rate grew from 112.93 EH/s at the beginning of the year to 153.48 EH/s by the end—a 35.91% increase. This growth was significantly lower than both 2019's 143.59% surge and 2020's 304.74% price appreciation. This disparity between price growth and hash rate growth created the potential for miners to earn超额利润 (excess returns).
Ethereum's hash rate growth was more pronounced, soaring from 141.55 TH/s to 281.37 TH/s, a 98.78% increase. With ETH's price skyrocketing 468.64%, the theoretical potential for超额利润 (excess returns) in Ethereum mining was even greater than in Bitcoin mining in 2020.
A Look at the Major Mining Pools
Mining pools are central to the modern mining landscape. In 2020, F2Pool was the leading Bitcoin mining pool with an average annual hash rate share of 17.53%. It was followed by Poolin (14.81%), BTC.com (12.30%), and AntPool (10.97%). The competition among the largest pools remained fierce, with rankings shifting frequently throughout the year.
A significant trend was the emergence of exchange-affiliated pools. Huobi Pool, OKExPool, and Binance Pool all established a presence. By year's end, their respective hash rate shares were approximately 9.39%, 3.57%, and 11.48%. Binance Pool, in particular, showed strong growth during the fourth-quarter bull market, increasing its share by over 4 percentage points.
The Ethereum mining pool ecosystem is more consolidated. Three pools—SparkPool, Ethermine, and F2Pool—collectively controlled 75.51% of the average annual hash rate. SparkPool alone commanded 32.69% of the network hash rate, consistently holding the top position.
An analysis of the correlation between a pool's hash rate and its block production revealed interesting strategies. Binance Pool showed a highly positive correlation (over 0.9 Pearson coefficient), meaning it successfully increased its share during periods of high profitability. Conversely, pools like Poolin and SlushPool exhibited a negative correlation, seeing their share decrease as the price rose. Major pools like AntPool, BTC.com, and F2Pool showed no significant statistical correlation, maintaining stable output.
Revenue Generation for Mining Pools
Theoretically, a pool's revenue is directly tied to its hash rate. The higher the hash share, the more blocks a pool is likely to mine, leading to greater revenue.
For Bitcoin pools, the leaders in hash rate were also the leaders in revenue. F2Pool, Poolin, BTC.com, and AntPool each had an estimated annual output exceeding $500 million, with F2Pool leading at $888 million. Assuming a 3% service fee, six pools generated an estimated fee income of over $10 million. F2Pool and Poolin both exceeded $20 million in fee revenue.
The revenue per unit of hash power remained stable year-over-year. In 2019, owning 1% of the network's hash rate yielded an estimated $1.54 million in fees. In 2020, that figure was $1.49 million, reflecting the similar total output of the Bitcoin mining industry in both years.
A similar estimation for Ethereum pools (not accounting for uncle or stale block rewards) showed SparkPool, Ethermine, and F2Pool as the top earners, with estimated annual outputs of $772 million, $582 million, and $257 million, respectively. Notably, SparkPool's output was comparable to that of top Bitcoin pools. Assuming a 2% service fee, only SparkPool and Ethermine generated over $10 million in estimated fee revenue.
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The Evolving Mining Hardware Market
The mining hardware manufacturers form the foundation of the industry. As of January 2021, there were 101 Bitcoin mining rig models on the market. Bitmain, MicroBT, and Canaan were the most prolific manufacturers, producing 25, 19, and 17 models, respectively.
Among the 15 most profitable miners, Bitmain and MicroBT each had four models. These top-performing machines had an average hash rate of 89 TH/s and generated an average daily net profit of approximately $14.50 (assuming an electricity cost of $0.05 per kWh). The most profitable model was the MicroBT M30S++, with a daily net profit of around $19.15.
The Ethereum mining hardware market is divided into custom-built rigs and pre-built, application-specific (ASIC) machines. The rapid development of ASICs is a sign of the Ethereum mining industry's maturation. Of the 60 ETH mining rigs tracked, 35 were custom-built (58.33%) and 25 were ASICs (41.67%).
Among custom rigs, those using AMD RX and NVIDIA GTX series graphics cards were the most common. In the ASIC segment, Innosilicon, Panda, and Wolf were leading brands, together accounting for 47.83% of the market.
The list of the 15 most profitable Ethereum miners was split almost evenly between custom rigs (8) and ASICs (7). Innosilicon had four models among the top performers, making it the strongest ASIC manufacturer in terms of product profitability. These top machines had an average hash rate of 747 MH/s. The Linzhi Phoenix was an outlier, boasting a massive 2600 MH/s hash rate and a daily net profit of approximately $227, far exceeding other models.
Frequently Asked Questions
What was the total revenue generated by Bitcoin and Ethereum mining in 2020?
Combined, Bitcoin and Ethereum mining generated approximately $7.6 billion in revenue. Bitcoin mining produced around $5.012 billion, while Ethereum mining generated about $2.69 billion. This highlights the immense economic scale of the cryptocurrency mining industry.
How did Ethereum mining revenue temporarily surpass Bitcoin's?
During August and September, heightened activity on the Ethereum network—driven primarily by the DeFi boom and liquidity mining—caused transaction fees to spike. This surge in fee revenue, combined with block rewards, pushed Ethereum's monthly mining revenue above Bitcoin's for a brief period, showcasing the impact of network utility on miner income.
Which mining pools were the most profitable?
For Bitcoin, F2Pool, Poolin, BTC.com, and AntPool were the leaders in both hash rate and estimated revenue. For Ethereum, SparkPool and Ethermine dominated. Notably, several pools, including six for Bitcoin and two for Ethereum, earned an estimated service fee income exceeding $10 million for the year.
What is the significance of custom ASIC miners for Ethereum?
The rise of application-specific integrated circuit (ASIC) miners for Ethereum signals the market's maturation. These dedicated machines are more efficient than general-purpose graphics cards for mining, representing a professionalization of the sector and a likely direction for its future development.
How does mining difficulty affect potential profits?
Mining difficulty adjusts to match the network's total hash power. In 2020, both Bitcoin and Ethereum saw prices rise much faster than their respective network hash rates. This mismatch between price appreciation and computational power growth created a window where miners could potentially earn超额利润 (excess returns) on their operations.
What role do transaction fees play in mining revenue?
Transaction fees are becoming an increasingly important part of miner revenue. For Bitcoin, fees made up 6.69% of total revenue in 2020, up from 2.8% in 2019. For Ethereum, fees were even more critical, constituting 16.06% of total revenue, driven largely by high demand for block space from DeFi applications.