New locations, technologies and larger players

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Source: Adobe / artiemedvedev

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North America and Russia will continue to see their share of Bitcoin mining increase in 2022. “There will be both consolidation and new entrants, but there will be more consolidation than new entrants.” Compared to 2021, mining regulations will appear a bit more moderate and impartial in 2022.

2021 has been a bumper year for crypto, which must also mean it has been a bumper year for miners. And to a large extent, it was, with miners pocketing $ 3 billion in revenue from Bitcoin mining (BTC) in the month of April alone.

But while transaction fees paid to BTC miners rose over 750% year over year in the second quarter of the year, that doesn’t tell the whole story when it comes to crypto mining. in 2021. It also doesn’t tell the whole story when it comes to mining in 2022.

Because while industry figures generally agree that miners will continue to reap significant incomes this year, they also expect competition to intensify in the sector. This will mean more companies, including energy companies, entering the market, as well as more investment in new mining technologies.

Change in geographic orientation

One of the biggest trends of 2021 was that the geographic location of cryptocurrency mining shifted from China – which has long accounted for more than two-thirds of Bitcoin hashrate at one point in time – to the rest. of the world. This will be a big theme again in 2022, with two nations, in particular, competing for dominance.

While North America and Russia have clear regulations for mining compared to other countries, North America, with better access to capital markets, will continue to account for the majority of the global hashrate. . But we believe that Russia, with high excess hydropower capacity for mining, will become the top international destination for sustainable mining, said Igor Runets, CEO of BitRiver, a Russian-based colocation service provider for renewable energy-based crypto mining.

Other mining sector figures agree that North America (Canada and United States) and Russia will continue to see their share of mining (Bitcoin) increase in 2022, even if they differ on which of these two will predominate.

North America will continue to see a high concentration of miners. The fact that Foundrys USA’s pool is now the largest pool in the world is more than enough evidence to suggest that this change will continue, said Zach Bradford, CEO of CleanSpark, the Nasdaq-listed Bitcoin mining company.

However, Bradford adds that other regions and countries, especially those with significant hydropower and geothermal resources, may experience an increase in mining share in 2022. This process will be accelerated by miners seeking to identify locations with cheaper and greener energy.

El Salvador is of course moving in this direction. Russia is another country that is probably underestimated for its mining potential, he told Cryptonews.com, adding that Russia’s growing importance for mining will depend on how the Russian government will react through regulations and tariffs.

Share of the global Bitcoin hashrate (monthly average)

* – To our knowledge, there is little evidence from large mining operations in Germany or Ireland that would support these figures. Their share is probably significantly inflated due to redirected IP addresses through the use of VPN or proxy services. Source: Cambridge Bitcoin Electricity Consumption Index

Indeed, the latest data from the Cambridge Center for Alternative Finances (through August 2021) shows that a number of small countries – like Kazakhstan, Malaysia and Iran – are increasing their share of Bitcoin mining. , in addition to states such as the United States, Russia, and Canada.

Turning specifically to the United States, BIT Mining Vice President Danni Zheng notes that states that take the initiative to introduce favorable crypto laws will be successful in attracting more hashrate from Bitcoin and other crypto assets. .

Due to their past experience, we believe miners will continue to move to places, like Ohio and Texas, which have a more user-friendly regulatory environment and climatic conditions favorable to mining. Additionally, the fact that the mayors of New York and Miamis are both strong supporters of cryptocurrency will likely drive miners in these regions in the future, especially if they adopt forward-looking policies to attract money. mining industry, she told Cryptonews.com.

Consolidation, competition and technologies

One thing commentators seem to agree on is that after the Chinese crackdown on mining and the emergence of new mining centers in 2021, 2022 will see significant consolidation.

There will be both regroupings and new entrants, but there will be more regroupings than new entrants. Bitcoin mining is very capital intensive and as such is less prone to typical disruption, Zach Bradford said.

Bradford explains that Bitcoin mining is now a critical infrastructure, this infrastructure requiring a significant amount of resources and investment for its maintenance. As such, the industry will inevitably experience some degree of consolidation as its regulatory environment takes hold.

We believe there will definitely be a consolidation this year with larger, more established miners purchasing new entrants who may have access to plentiful energy but lack the capital to purchase and host mining rigs, a t he told Cryptonews.com.

Danni Zheng also expects more consolidations than new entrants this year, with mining’s resource-intensive nature being one of the reasons she puts forward for this.

With the global hash rate increasing by 20% during the year according to data from BTC.com, we expect the number of new market entrants to decline in 2022 after the rapid boom the industry experienced in 2021. .We expect that many inexperienced mining companies will be forced to adjust their plans during the trial and error phase as they determine the appropriate allocation of resources and how to maximize efficiency. their data centers, she said.

However, while there will be some degree of consolidation, competition among large mining companies will intensify this year, which will spur technological innovation within the sector. This is something that will be further accelerated by the entry of energy companies, whose control over energy resources will lead them to a transition to mining.

I believe that we will continue to see more companies, especially those in the energy sector, entering the mining industry in 2022. It also means that competition between miners will continue to intensify and more companies. flexible, innovative, and sustainable mining operations will lead the competition, said Igor Runets.

The CEO adds that he expects mining operations to focus more on new technologies – such as immersion cooling – that can make operations more efficient and profitable. Likewise, Zach Bradford claims that the emergence of US-based mining equipment manufacturers will lead to greater technological change in the industry.

Regulation becomes more constructive

Compared to 2021, mining regulations will appear a bit more subdued and even-handed in 2022, especially with China now out of the equation.

With the exit of China, I don’t think the regulations will have a bigger impact on the mining industry in 2022 than they did in 2021. The governments of the United States and Russia – the countries that currently account for most of the Bitcoin mining operations in the world – encourage sustainable Bitcoin mining as a way to strengthen power generation infrastructure and boost economic growth in otherwise underdeveloped areas, said Igor Runets .

Yet while 2022 is likely to be more regulatory friendly for minors, some industry players expect the new year to bring a mix of favorable and unfavorable laws.

Some of them will be good, providing the kind of safeguards the industry needs to continue to be successful. Some will be like China and be detrimental to miners in those countries, but perhaps a boon for miners in other parts of the world, Zach Bradford said.

While Bradfords’ comment may suggest there will be equally restrictive and permissive mining regulations in 2022, he generally hopes the bigger picture will be positive. This is in part because Bitcoin, crypto, and mining will have become so important at this point that it would be pointless for most regulators to try to eliminate them.

The year 2022 will be a turning point in the mass adoption of Bitcoin and there will be resistance. But this resistance is a last breath, he concluded .___ Read more: BTC Mining Migration, Challenges & Forecasts for the Post-Crackdown Industry-Dominated by Institutions, Bitcoin Mining is also Possible from Home

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Find more forecasts for 2022 here.

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