Thread by @_Checkmatey_

1/ Very pleased to release my next research paper, focusing on the Mining Market Mechanics for #Decred

This was a fascinating study looking at the history, distribution behaviour and performance of the networks largest compulsory seller

Summary thread👇

medium.com/@_Checkmatey_/…

2/ Decred launched into a developed 2016 GPU mining industry where it was dual mined by Ethereum miners.

A study following PoW mined coins supports anecdotal evidence that GPU miners dumped en mass 80% of their DCR.

Chart shows % of DCR income sold (solid) or hodled (dashed)

3/ Conversely, ASIC miners have invested around 25-30% into tickets. This trend has stabilised (yellow lines) showing that Decred miners have serious skin in the game.

That said, profitability has been challenging to obtain and as the next tweets show, few managed to break even.

4/ The paper explores estimates assuming a single device type based on the actual hash-rate:

- How many devices are needed
- CAPEX expenditure
- Power consumption
- OPEX costs
- Profitability
- Capitulation levels

Chart below shows how profitability collapsed on ASIC launch.

5/ This is largely expected. ASIC mining is hyper competitive, but the difference for Decred is they launched at the peak of the 2018 bull market.

Consider two cases:
Strong miner with all in costs of $0.075/kWh
Weak miner with all in costs of $0.125/kWh

Only the strong survive

6/ This leads to eventual capitulation.

I estimate that outdated ASIC rigs never broke even and likely capitulated around October 2019, coincident with the peak hash-rate of ~550PH/s.

The March 2020 was the final straw. Even with latest ASICs, any weak miner likely capitulated.

7/ With all that said, there is a great cypherpunk proverb:

'Miners put the bottom in'

I believe that the worst of the storm is over. We have seen hash-rate recovery, evidence of miner capitulation, and on-chain metrics are suggesting greener shoots on the horizon.

8/ I analyse four on-chain metrics to see how they line up with the history and performance of Decred miners.

- Block Subsidy models
- Difficulty Ribbon
- Puell Multiple
- Miner Pulse

Not only do they tell the whole story, they tell it with exceptional accuracy. This is unreal!

9/ Difficulty ribbon

10/ Puell Multiple

11/ Miner Pulse

12/ Summary:

- GPU miners dumped everything they mined
- ASIC miners have serious skin in the game but have massive overheads to recover
- Weak and outdated mined have likely capitulated
- DCR coin and vote distribution is epic, just as PoW was designed

Miners put the bottom in

13/ Huge thanks to @OfficialCryptos for designing the cover artwork and to @notsofast for his insights into the nature of early GPU dual mining

This was a great paper to research and write and I think many will get a lot of value and fundamental understanding about Decred mining