Crypto mining is profoundly healthy and the industry is back to reporting healthy margins, according to CoinDesk’s 2023 Mining Week. Global networks of distributed trust machines ensure decentralization and lay the plumbing for an open internet. As of July 21, Bitcoin’s hashrate was 400 exahash per second, up five-fold from June 2021. However, in April 2024, the entire economics of the mining industry will undergo a profound change with the fourth Bitcoin halving, reducing the coinbase transaction reward from 6.25 bitcoin to 3.125 bitcoin.
Despite the bear market of 2022, publicly traded mining companies such as Core Scientific (CORZ), Riot Blockchain (RIOT), Bitfarms (BITF), Iris Energy (IREN), and CleanSpark (CLSK) have recovered nicely in 2023, effectively acting as high beta bets on the price of bitcoin. Bitcoin mining uses energy and, given Bitcoin’s growth in the last few years, miners are now working with oil & gas producers to take off their associated gas and with microgrid developers to bring electricity to people in Kenya and Malawi.
Anthony Power, a bitcoin mining analyst who writes for Compass Mining, thinks miners will survive the halving. You also have to think about the spot Bitcoin ETF applications. If those get approved, just think about how much money will come into Bitcoin, he said.
Mining is still a young industry, and it’s ripe for change. There are many potential unpredictable factors which could crop up and turn it all on its head, such as the price of bitcoin or Ordinals, Bitcoin’s answer to NFTs.