2021 was a major year of Bitcoin mining. One-third of May 2020 attracted widespread attention to the mining industry in general, and the growing interest remained unabated.
In 2021, due to the economic advantage, almost all participants benefited the mining industry and more and more participants gathered.Appearance of Flare gas mining, Elon Musk’s comment on Bitcoin’s ESG footprint, Creation of Bitcoin Mining Council When Western immigration accelerated as a result of Chinese regulation All of these contributed to the rapidly expanding and changing mining landscape, which is characterized by increased transparency.
Despite all the attention the historically opaque market received last year, due to volatility, regulation and supply chain disruptions, 2021 is one of the most amazing years in the history of Bitcoin mining and the most. It was one of the forming years.
Today’s mining ecosystem
A significant number of new entrants have been seen in several industries, including brokerage firms, off-the-grid mining and hosting. Most notably, the industry has seen large capital inflows through a record number of public listings, driven by the liquidity and demand for capital that only the US public market can provide.
2021 Trends in Bitcoin Mining Entering 2022
The profitability of the mining industry in 2021 is that the price of Bitcoin has reached a record high. Global chip shortage When Ban About the Chinese mining industry. Despite China’s ban, the hash rate has recovered to a V-shape, Ended the year near a record high, well above the place where the year began..
In 2022, Galaxy Digital expects a significant increase in hash rates and a reduction in operating profit if prices are constant. Given the amount of hash rate for orders placed by public miners, the hash rate is expected to continue to deviate from the price. By the end of the year, the network hash rate will reach somewhere between 300 Exa Hash (EH / s) and 370 EH / s per second, with a baseline estimate of 335 EH / s. Even if the hash rate is expected to increase significantly, many listed miners may still remain highly profitable.
At the beginning of 2021, machine security became a major bottleneck as a result of supply chain disruptions and a global chip shortage. With BTC trading at a high price in 2021, ASICs became a demand and long lead times became the norm. The liquidity market, which has relatively few transactions, reflects the soaring ASIC prices.
Both Chinese miners, hardware makers, and international competitors had already expanded their business abroad by 2021, but China announcement May ban on mining. The ban has spurred significant growth in the mining business in Kazakh, Russia and the United States, dramatically decentralizing its network from China and significantly improving the profitability of miners who remain online.
The United States had already gained market share before the ban as a result of its excellent regulatory and financial infrastructure, but by early 2021, the United States was still the frontier market for the mining industry. Following the ban, North America rapidly became the center of the mining industry, with an increase in the number of miners using the public market to raise both debt and stock, usually after selling stock in the private market.
At the beginning of 2021, there were only two Bitcoin mining companies listed on NASDAQ, Marathon Digital (MARA) and Riot Blockchain (RIOT), some of which were traded on the Canadian TSX Venture Exchange. I did. As of the end of 2021, 16 Bitcoin mining companies were listed on NASDAQ and 7 more are pending.
As the industry becomes more competitive and economies of scale become more important, more mining companies will take advantage of the unparalleled liquidity of the public stock market and use the capital they raise for additional equipment and infrastructure. Expected to try to invest in construction. This trend is especially noticeable when the price of BTC is high enough and most miners continue to make a profit. If the market remains sluggish, M & A activity could surge as large, slim miners opportunistically buy inefficient competitors for hard assets such as machinery and transformers.
As more and more Bitcoin mining companies are listed on US exchanges today, public company reporting requirements provide industry participants with important insights into the Bitcoin mining business. One of the biggest benefits of having many listed miners is to observe press releases detailing corporate machine purchase orders, allowing researchers to gain future hash rate growth and ASIC market advantages. It’s easy to estimate.
The share of hash rates offered by publicly available Bitcoin miners will increase from 40% to 45% of network hash rates by the end of 2022, based on the EH of over 100 machines ordered in 2022. Expected. Press release.
2021 was a very turbulent year for the mining industry. The mining industry is beginning to attract more attention both inside and outside of Bitcoin space, operators and investors are interested in its economics, and others are concerned about its perceived environmental impact.
As for 2022, we are bullish. If current trends continue, the industry will continue to specialize and efficient miners will differentiate themselves from other packs. North America will play a major historical role next year, especially as public companies continue to gain market share by increasing hash rates. Industrial expansion in this region will bring more jobs to rural communities in the United States and Canada as miners look for areas with excess electricity, including former manufacturing hubs.
Miners will probably have a good year. In many cases, supply chain failures and hardware constraints will limit the increase in hash rates, and the ongoing confusion between hash rates and prices will continue.
This is a guest post by Karim Helmy and Brandon Bailey.The opinions expressed are completely unique and are not necessarily BTC Inc or Bitcoin magazine..