Bitcoin miners think the global hash rate will grow “aggressively”

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Bitcoin (BTC) seems to be on everyone’s mind lately, as the world recently saw the price of BTC take a rather unexpected bearish turn this month. On January 21, 2022, Bitcoin hit its lowest level in six months, falling below $40,000 for the first time in months.

While some panicked, other industry experts pointed out that the Bitcoin network has become stronger than ever before. The growth of the Bitcoin network has become evident as hash rate numbers for BTC continue to hit new highs this month. For example, on January 22, the BTC network recorded an all-time high of 26.643 trillion with an average hash rate of 190.71 exahash per second (EH/s).

The hash rate will continue to grow, which is a good thing

Samir Tabar, chief strategy officer at Bit Digital – an exchange-listed bitcoin miner – told Cointelegraph that the BTC hash rate refers to the amount of computing power brought into the network at any given time. Tabar explained that when it comes to Bitcoin mining, a higher hash rate equals a good hash rate. “The more computing power there is to maintain a network, the more secure it will be and the more transactions it can handle,” Tabar said.

As such, the recent hash rate figures for Bitcoin are extremely remarkable, even with the price of BTC falling. Peter Wall, CEO of crypto-mining company Argo Blockchain, told Cointelegraph that he was not surprised to see the BTC hash rate hit nearly 200 EH/s. Wall further stated that even with events that have recently disrupted the BTC mining hash rate, such as the political upheaval in Kazakhstan, the hash rate will continue to grow monthly:

“Argo Blockchain’s mining margin last year in 2021, which is our revenues minus our direct costs, was over 80%. It was a very good year for the miners. In 2020, when BTC prices were much lower, our margin was 41%. So this year, I think we will still see strong margins in the space despite the recent drop in Bitcoin price and rise in the hash rate.

Darin Feinstein, co-founder and co-president of Core Scientific – a major publicly traded blockchain infrastructure provider – told Cointelegraph that based on previous Bitcoin hash rate data, the BTC network has grown 200% following the mass exodus of miners from China. :

“A year ago, the Bitcoin network was around 143 EH/s. Following the mining ban in China, the network fell to 63 PE/s. Today, the hash rate has increased to around 198 PE/s. This recent increase represents three important measures. First, it represents a hash rate increase of 130 PE on the network. Secondly, this represents 130 pe of new hosting infrastructure and primarily next generation hardware deployment and thirdly, this deployment has taken place in geographic regions that use much cleaner energy than the energy used in China.

With that in mind, Feinstein noted that even though the BTC network has reached all-time highs in terms of EH/s, due to massive improvements in miner chip technology and geographic spread away from China, the network is now the most efficient and effective. durable than it has ever been. Feinstein added that this data is important because it shows the amount of energy used by each terahash, which is usually represented by a metric called jules/terahash. He noted that this ratio has decreased significantly in recent years, demonstrating a significant increase in the energy efficiency of mines.

Bitcoin mining efficiency chart. Source: Darin FeinsteinWill the infrastructure support network growth?

Michael Levitt, Chairman, Co-Founder and CEO of Core Scientific, told Cointelegraph that he fully anticipates that the global BTC hash rate will continue to grow at an aggressive pace.

However, Levitt mentioned that this growth depends on the price of Bitcoin going forward, as well as the success of the infrastructure being built. “The amount of infrastructure expected will be challenged by global supply chain issues,” he noted.

Feinstein added that infrastructure is the biggest challenge when mining Bitcoin. “The bottlenecks for Bitcoin mining are land, energy, equipment and finally infrastructure. There’s a lot of ASIC hardware to buy, power and land are also readily available, but miners need a place to plug in and historically that’s where miners run into trouble,” said he commented.

North America has emerged as one of the largest Bitcoin mining centers in the world, according to data from the Cambridge Bitcoin Electricity Consumption Index, which shows that 35% of the average monthly BTC hash rate comes from the United States, while 10% comes from Canada. Wall explained that North America has taken the lead as the global Bitcoin mining hub for a number of reasons. “This is so because of the region’s crypto-friendly jurisdiction, stable regulatory environment, innovation-friendly nature, and most importantly, access to the most important thing that miners need. need – low-cost, preferably renewable energy.”

Wall explained that low electricity costs in the United States have been important for miners, especially when organizations operate the good part of the power grid. “We have seen significant growth in Texas over the past 12 months,” he said.

Cointelegraph previously reported that the bitcoin mining industry in Texas consumed approximately 500 to 1,000 megawatts (MW) of electricity in November 2021. The Texas Electric Reliability Board reportedly predicted that demand could grow five-fold. 2023 and has planned an additional 3,000 megawatts. to 5000MW.

Wall explained that many miners move to Texas due to the state operating its own power grid which consists of a high degree of electricity from sustainable generation sources, but which requires more flexible demand or load:

“Miners can provide a constant and flexible load. It also helps that Texas has demand response programs in place, where miners stop and return power to the grid when demand is high. This makes the network more resilient.

Such benefits prompted Argo Blockchain to build its next 200 MW facility in Dickens County, West Texas, right next to a 5.5 gigawatt substation. “There is a lot of congestion in this substation and they need a local load to relieve it. West Texas electricity has to travel a long way to reach major urban cities like Dallas and Houston. But, if we can use that energy much closer to where it’s produced, that relieves congestion,” Wall noted.

By drawing power from a nearby substation, Argo Blockchain demonstrates the use of sustainable energy. According to Wall, the mining company has been carbon negative since 2020. This is significant, as Tabar said that there is a massive environmental, social and governance movement currently confronting the crypto mining industry:

“Miners need to tap into clean energy sources or else they will be bankrupt regulated. These may not always be the cheapest energy sources. dirty energy, even if that source is cheap.

A rush of mining companies to the public is another trend that the Bitcoin mining industry is likely to witness this year. More recently, Texas-based bitcoin mining company Rhodium announced plans to offer 7.69 million shares at $12-$14 each in an initial public offering (IPO).

Core Scientific went public on January 20 after merging with Power & Digital Infrastructure Acquisition in a SPAC transaction. Although shares of Core Scientific have fallen since then, Feinstein mentioned that every publicly traded crypto company — like Coinbase, Galaxy Digital and others — offers institutional investment opportunities in the US market. “It improves and brings credibility to the whole industry,” he remarked.

Levitt added that the Bitcoin miner IPO brings a number of benefits, including greater access to capital while having publicly traded shares that can be used to acquire and build other businesses. Additionally, Levitt added that having a public presence is helpful for conversations in and around the financial services industry. “However, the main benefit is much easier access to capital for the growth and development of our business,” Levitt said.

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