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Cryptocurrency miners are turning their machines back on as bitcoin’s rallying price offers a vital lifeline to their cash-strapped businesses.

The token’s value has emerged from the doldrums to soar more than a quarter this year against the dollar, prompting owners of massive mining server warehouses to ramp up their use in the battle for more bitcoins.

The average hashrate, or computing power directed towards bitcoin mining, hit a record 280 exahash — or quintillion — operations per second on Jan. 20, according to data from Hashrate Index, an industry news service. mining.

The upsurge in activity is a sign that beaten sector may come back to life after being rocked by high energy costs and falling cryptocurrency price. The level of activity has more than doubled from a low point in July, when the crypto market was hit by a credit crunch.

Miners compete to solve cryptographic puzzles that validate batches of transactions and create new blocks in the blockchain, a ledger of transactions. This makes them the guarantors that bitcoin transactions are trustworthy in a system that bypasses third parties such as banks and exchanges. The winner is rewarded with new coins.

Many are sitting on large amounts of mining equipment and capacity, bought with cheap silver in 2021 and early 2022 in anticipation of cashing in on rising coin prices. But bitcoin prices have fallen 65% in the past year and energy prices have soared, forcing many companies to shut down their servers to save money. Others, like Core Scientific, couldn’t resist the pressure and filed for bankruptcy.

“Sentiment among miners is better than it’s been in a long time,” said Hashrate Index analyst Jaran Mellerud. “For many players facing bankruptcy, the sudden rise in the price of bitcoin is a lifeline.”

The rebound supported investor optimism in listed companies like Marathon Digital Holdings, which has climbed 155% this year, and Hut 8, which has climbed 134%.

But miners still face a long way back from the brink. Powering up their servers is expensive. An algorithm adjusts the “difficulty level” of bitcoin mining as new computers enter or leave the network, to ensure that the token is mined at its regular interval of approximately every 10 minutes.

The influx of miners has raised this level. According to, it now takes miners a record 37 tn hashes or guesses before verifying a block, so losers are expending ever greater amounts of energy for nothing.

They also face pressure from politicians around the world, who see miners’ computers sucking large amounts of power, depleting local resources or damaging the environment. Others view the profits they make as a taxable asset.

The Canadian provinces of British Columbia and Manitoba have banned new connections to their networks for 18 months, while Hydro-Quebec, Quebec’s utility provider, filed a request to reallocate 270 megawatts of electricity that it had earmarked for the mining industry.

In December, the lower house of Kazakhstan, host to the third largest share of mining activity in the world, approved a bill that will impose a corporate tax on miners and reduce their energy consumption.

Paraguay, which has an abundance of cheap hydropower, has rejected legislation that would have capped tariffs for miners at 15%.

“Miners are becoming very selective about where they build their infrastructure,” said Joe Burnett, an analyst at mining consultancy Blockware Solutions. “A few years ago people were just focused on cheap energy, but now it’s much more important to determine which political jurisdiction is the most favorable and isn’t going to shut down our operations.”

Miners say they have become an unfair target. The Bitcoin Mining Council, an industry group, estimated in July that just under 60% of global mining energy consumption is sustainable, although the Cambridge Center for Alternative Finance puts the figure at around 37%.

“There is a false environmental argument against the mining industry,” said Samir Tabar, chief strategist at Bit Digital, a mining company operating in New York, Texas, Nebraska and Georgia. “It seems like no matter what bitcoin miners do, even if we use 100% renewable energy, nothing is right.”

Ercot, the organization that operates the Texas power grid, will launch a voluntary reduction program for heavy energy consumers like bitcoin miners to reduce their energy consumption during peak demand periods, until that it develops a permanent regime to deal with shortages.

But that pinch point can provide an unexpected opportunity. Miners with power purchase agreements, which lock in the price they pay for power, can sell the power back to the grid. Riot and Hive Blockchain earned $4.9 million and $3.1 million respectively in December.

“Reduction is the future of mining,” Burnett said. “If it doesn’t make sense financially, you might as well sell [energy] back to someone.

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