The share of the Bitcoin (BTC) network managed by listed mining companies is growing up It will increase to 40% by mid-2023, according to a new report from Hashrate Index. However, this could further stress the already bearish BTC market.
Public Bitcoin Miner Hash Rate Up 295% in One Year
The outlook comes after evaluating the hash rate performance of Core Scientific, Marathon Digital Holdings, Riot Blockchain, and other public miners over the past 12 months. Notably, these companies increased hash processing power from 15 exahash per second a year ago to 58 EH/sec in October 2022 (a 295% increase).
By comparison, private miner hash rates increased from 134 EH/s to 177 EH/s over the same period, a 58% growth.
Jalan Mereld, Bitcoin mining analyst and author of the Hashrate Index report, said, “The driving force behind the rapid capacity growth of public miners is the availability of cheap capital in the 2021 bull market.” explains.
He added that public miners used the money to purchase large-scale mining equipment. As a result, these companies have tens of thousands of Bitcoin mining rigs in storage, waiting to be hooked up while waiting for more rigs to be delivered.
Core Scientific – Largest public company #bitcoin Miners – have a 5% share of the total hashrate. Marathon and Riot followed suit, each controlling more than his 2% of Bitcoin hashrate.
In total, there are 7 public Bitcoin miners with hashrate share above 1%. pic.twitter.com/ZnwsFjvQcy
— Jalan Mellerud (@JMellerud) October 24, 2022
Therefore, the hash rate of Bitcoins produced by public miners could continue to increase significantly as new machines come online.
Private miners, on the other hand, could not access the capital to purchase mining equipment. As such, growth in Hash his rate contribution may remain relatively slow, Mellerud argues.
Stressed Miners May Increase Bitcoin Selling Risk
In 2022, Bitcoin miners in general have been hit hard by falling BTC prices, rising energy costs, regulation and increased competition. Public mining companies have scrambled to raise capital by issuing additional shares or taking on more debt, resulting in a large drop in share prices.
For example, the Valkyrie Bitcoin Miners ETF, which tracks several major public miners, has plunged 75% since its launch in February.
Another less popular alternative to fundraising is selling bitcoin at a low price.For example, Core Scientific dumped 85% of Bitcoin holdings since the end of March, according to the August update.
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Over the same period, BTC’s price fell by 60% to around $19,500 per coin. In other words, an increase in hashrate could increase the need for miners to sell their bitcoins for cash in order to continue their operations.
“It’s an absolute slaughter.” I have written Marty Bent, founder of Bitcoin media company TFTC, added:
“Bitcoin miners are currently taking a hit, with hash rates continuing to climb, prices remaining flat, and energy prices continuing to rise, there could be a wave of failures in the coming months. there is.”
Meanwhile, Mellerud said many public miners will not be able to keep up with the reduced cash flow and will go bankrupt. As a result, their mining equipment could be auctioned off to private miners.
Conversely, if the Bitcoin price experiences a decisive bullish reversal, public miners’ decision to increase capacity could pay off.signs of a potential market bottom are already emerging, offering relief to miners struggling at current prices.
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