An Overview Of The Bitcoin Mining Industry
The Bitcoin mining industry had a rollercoaster 2021 largely driven by China’s withdrawal from the ecosystem and what is now being referred to as the ‘The Great Migration’. For some context, China banned Bitcoin mining in the summer of 2021 which catalysed a migration of miners out of China into countries like America and Kazakhstan.
To get a bit of background into how significant this move was back in 2019, China controlled roughly 76% of all Bitcoin mining energy globally. Moving to the present day, that is now close to 0%.
One of Bitcoin’s biggest criticisms over the years has been the issue of decentralisation. Many believed that Bitcoin wasn’t truly decentralised due to China retaining so much mining power within their country. So in a way, ‘The Great Migration’ over the long term was more beneficial for the Bitcoin network than detrimental even though the price crashed 50% over summer 2021.
The Bitcoin hashrate is a key security metric. The more hashing (computing) power in the network, the greater its security and its overall resistance to attack. The black line in the graph marks the high in May 2021 when a lot of miners in China went offline. What’s remarkable is the recovery though. Within a year hashrate has gone on to create a new all-time high as miners within China relocate around the world demonstrating the resilience and adaptability of the Bitcoin network.
Energy Consumption
Last year Michael Saylor put together the Bitcoin Mining Council which is comprised of 14 members and represents 32% of the mining industry. One of the reasons for its formation was to debunk some of the myths associated with Bitcoin energy consumption, so let’s take a look at some.
- The Bitcoin network uses a negligible amount of the world’s energy — 189 terawatt hours as compared to 162,194 terawatt hours of total global energy use (0.02% of all energy consumed).
2. Bitcoin miners are rapidly becoming more energy efficient using an increasing percentage of sustainable sources (wind, solar, hydro, geothermal, nuclear) in their energy mix.
Bitcoin is powered by a higher mix of sustainable energy (56%) than any other industry or major country.
Mining Trends Over 2022
Accessibility: Companies like Compass Mining aim to bring the power of Bitcoin mining to the everyday home. Compass Mining has a wide range of products ranging from beginner to advanced which makes mining more accessible. With hashrate dropping last year, Compass Mining hardware was a great solution to help mitigate that drop in power.
Rise in M&A: As winners and losers emerge from the hashrate wars, larger, more capitalized companies will likely gobble up smaller miners who struggle to keep pace. Marathon Digital Holdings is a big mining player in America and is expected to grow aggressively this year after raising nearly $700 million.
Cheap power and ESG: Access to cheap power has always been one of the main pillars of a profitable mining business. However, as the criticism around mining’s impact on the environment has grown, it is all the more important to secure renewable sources of energy to stay competitive. I believe more mining businesses will follow the trend of carbon-neutral or renewable-powered mining this year as ESG compliance continues to be a must for most tech companies.
Get in touch on Telegram to see how we can supercharge your web3 project in 2022.
Author: Dilen Pattni Brand Marketer
