Bitcoin miners believe global hash rate to grow ‘aggressively’

Bitcoin (BTC), seems to be on everyone’s mind lately, as the world witnessed its price take an unexpected bearish turn in January. Bitcoin fell below $40,000 for six months on January 21st, 2022.

While panicked people were right to be, industry experts pointed out the fact that the Bitcoin network is stronger than ever. As the hash rate figures for Bitcoin continue to rise, this is a sign of the Bitcoin network’s growth. On Jan. 22, BTC network reached an all-time record of 26.643 trillion, with an average hashrate of 190.71 exahash/second (EH/s).

It is good news that the hash rate will continue growing.

Cointelegraph spoke with Samir Tabar, chief strategist officer at Bit Digital, a publicly traded Bitcoin miner. He explained that the BTC Hash Rate refers to how much computing power is being added to the network at any one time. Tabar explained that a higher Bitcoin mining hash rate is indicative of a high hash rate. Tabar stated that the more computing power used to maintain a network will make it more secure and be able handle more transactions.

The recent Bitcoin hash rate figures are notable, even though the price of Bitcoin is down. Cointelegraph was told by Peter Wall, the CEO of crypto mining company Argo Blockchain that he wasn’t surprised to see Bitcoin’s hash rate reach close to 200 EH/s. Wall stated that the BTC hash rate will grow each month, despite recent events like the political turmoil in Kazakhstan.

“Argo Blockchain’s 2021 mining margin, which is our revenue less our direct costs, was more than 80%. It was a great year for miners. Our margin was 41% in 2020, when BTC prices were lower. In spite of the recent decline in Bitcoin’s price and the rise in the hashrate, I believe we will see strong margins this year.

Cointelegraph spoke with Darin Feinstein, cofounder and cochairman of Core Scientific, a major publicly traded blockchain infrastructure provider. He said that the BTC network grew 200% after the mass exodus from China.

“The Bitcoin network was around 143 EH/s one year ago. The network dropped to 63 EH/s after China banned mining. The hash rate today is approximately 198 EH/s. The recent increase in hash rate represents three important metrics. It represents an increase of 130 EH in the network’s hash rate. It also represents 130 EH of new infrastructure hosting and primarily new generation hardware. Furthermore, it has been deployed in regions that use much cleaner energy than China’s.

Feinstein stated that the BTC network’s EH/s has reached all-time highs due to massive improvements in miner chips technology and geographical distribution away from China. The network is now more efficient and sustainable than ever before. Feinstein said that this data is crucial because it shows how much energy each terahash consumes. This is usually represented as a metric called “jules/terahash”. This ratio has decreased significantly over the past several years, which demonstrates a significant increase in mining energy efficiency.

Chart showing the efficiency of Bitcoin mining. Source: Darin Feinstein

Infrastructure will support network growth

Core Scientific’s co-founder and CEO, Michael Levitt, stated to Cointelegraph that he expects the BTC global hashrate to grow at an aggressive pace.

Levitt said that this growth depends on Bitcoin’s price moving forward and the success of infrastructure being built. He noted that global supply chain issues will challenge the expected infrastructure.

Feinstein said that the greatest challenge in mining Bitcoin is infrastructure. Land, energy, equipment and infrastructure are the biggest bottlenecks in Bitcoin mining. He said that while there is plenty of ASIC hardware available for purchase, energy and land are also easily accessible. However, miners still need somewhere to plug in their power. This is historically where miners have had problems.”

According to data from the Cambridge Bitcoin Electricity Consumption Index (which shows that 35% of the average monthly BTC haveh rate is from the United States and 10% from Canada), North America has emerged as one of the largest Bitcoin mining centers in the world. Wall explained that North America is the global Bitcoin mining hub because of a variety of factors. This is due to North America’s crypto-friendly jurisdiction and stable regulatory environment. It also has a pro-innovation nature. And, last but not least, it has access to low-cost, renewable power.

Wall explained that miners have enjoyed low power costs in the U.S., particularly when they can access the right parts of the grid. He said that Texas has seen “significant growth” in the past 12 months.

Cointelegraph reported in the past that Texas’ Bitcoin mining industry consumed approximately 500 to 1,000 megawatts of power (MW) during November 2021. According to the Electric Reliability Council of Texas, demand for electricity could rise fivefold by 2023. They have also planned an additional 3,000 – 5,000 MW.

Wall explained that Texas has many miners moving to it because the state runs its own power grid. It consists of high-quality power from renewable sources but requires more flexibility in demand or load.

“Miners can provide a steady load that is flexible. Texas has demand response plans in place. This means that miners can shut down and provide power back to the grid when they are not needed. This makes the grid more resilient.

These benefits have led Argo Blockchain, a 200-MW facility, to construct its next facility in Dickens County (west Texas), right next to a substation of 5.5-gigawatts. “They need to alleviate the congestion at that substation. Power from Texas must travel a great distance to reach major cities such as Dallas and Houston. Wall noted that if that energy can be used closer to the source, it will relieve congestion.

Argo Blockchain has demonstrated the use of sustainable electricity by drawing power from a nearby utility. Wall stated that the mining company is carbon neutral since 2020. This is significant, because Tabar stated that the crypto mining industry is currently facing a huge environmental, social, and governance crisis.

Or they’ll be outlawed. It doesn’t have to be about finding the lowest priced power. If miners use dirty power, they will eventually be subject to valuation discounts, even though it is expensive.

Publicity has its perks

Another trend that the Bitcoin mining industry will witness in 2018 is a rush to make mining companies public. Recently, Rhodium, a Texas-based Bitcoin mining firm, announced plans to offer 7.69million shares for $12-$14 each as part of an initial public offering (IPO).

Core Scientific became public in January 20th after it merged with Power & Digital Infrastructure Acquisition through a SPAC transaction. Despite Core Scientific’s shares falling since then, Feinstein noted that all publicly traded crypto companies — such as Galaxy Digital, Coinbase and others — bring institutional investment opportunities to America. He noted that this was “enhancing and bringing credibility” to the industry.

Levitt said that Bitcoin miners becoming public can bring about many benefits. They have better access to capital and publicly traded equity that can then be used for acquisitions or building new businesses. Levitt also stated that having a public presence can be useful in conversations within and around the financial service industry. Levitt stated that the main benefit to having a public presence is greater access to capital for growth and development of our business.