Wednesday, March 29, 2023

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Bitcoin mining industry may suffer more in 2023

Bitcoin mining industry, like the rest of the cryptocurrency industry in the past 2022, has taken a serious hit. As we enter 2023, hoping that the market will turn around and cryptocurrency prices will recover, industry analysts expect the mining industry to continue to struggle.

Bitcoin mining industry may suffer more in 2023

More companies will need to merge vertically in 2023, with their energy provider, in order to ensure stable long-term operation in the face of the halving, as cryptocurrency mining becomes an increasingly important component of the energy market. For bitcoin mining investors, the approaching halving is bad news. After Bitcoin halves, the block rewards for miners will drop dramatically.

What do the experts say?

Bitcoin mining experts said the sector is unlikely to feel a relief anytime soon. The CEO of Canadian miner Hut 8 (HUT), Jaime Leverton, recently said that the worst is yet to come in terms of capitulation and bankruptcy, especially in the first half of 2023, and that he’s not sure if relief will come in the second half of the year.

According to Fiorenzo Manganiello, founder of Cowa, a mining and venture financing organization, it would be better for buyers to simply acquire bitcoin rather than deal with the hassles of owning and managing hardware to mine the cryptocurrency.

BTC mining service provider Jaran Millrod, an analyst, believes that miners will use 2023 to strengthen their financial positions and increase their operational efficiency unless a large-scale bull market occurs.

Glassnode figures showed that BTC mining profits have been steadily declining over the past several weeks. Selling pressure on miners is sure to intensify if their income continues to decline.

Bitcoin mining earnings | Source: Glassnode
Bitcoin mining earnings | Source: Glassnode

Miners’ income in 2022 was very low

On the other hand, Pierre Rochard, a Bitcoin strategist at cryptocurrency exchange Kraken, said not long ago that BTC mining income for December has returned to the level it was usually at before the halving. In his analysis, he provided a chart showing the average daily income generated by mining BTC from 2016 through 2022.

Source: Pierre Rochard
Source: Pierre Rochard

In contrast to previous years, the miners’ income was very low. In 2015, Bitcoin mining profitability reached an all-time high of about $3.00/TH per second. But by 2022, the value has dropped to less than $0.104 USD/TH per second.

Bitcoin mining revenue chart at time of publication | Source:
Bitcoin mining revenue chart at the time of publication | Source:

Given that these experts did not expect any respite for miners in the near future, it looks like it’s going to be a tough year for the sector. They had the best belt over the next twelve months because it could potentially be tough.

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