How could the mining industry evolve in 2022?

2021 has been an eventful year for the mining industry. After the implementation of a large-scale regulatory crackdown on Chinese miners, they were forced to relocate their operations, putting the United States and Canada at the top of the undisputed hashrate capitals of the world. As the new year looms, Coindesk analysts have shared their thoughts on the major mining trends that are shaping up for 2022.

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A doubling of the hash rate

Major mining players expect a significant increase in hash rate next year as more miners join the network.

April LuoInstitutional Sales Representative for Asia at BlockFibelieves that this will increase the hash rate and, therefore, the difficulty of the network. Juri Bulovicvice-president at FoundryDigitala bitcoin mining pool, said mining difficulty will continue to increase to new all-time highs next year due in part to the increased efficiency of the latest generation of machines.

Some industry players expect the hash rate to reach between 300 and 350 exahash/second (EH/s) by the end of next year, an increase of 70% to 100% from the rate on December 14 of 179 PE/s, according to data from the analysis company Glassnode.

Margin squeeze

This increase in hash rate will force miners to work harder to stay profitable. Inexperienced players will likely be the most affected by this new constraint and will experience lower margins, said Danni Zhengvice-president of BIT Mining. Peter WallCEO ofArgo Blockchainsaid miners will have to strive to be ultra-efficient while growing their businesses.

Increase in mergers and acquisitions transactions

This hashrate war will cause larger, better-capitalized companies to absorb smaller miners who are struggling to keep up.

It is also possible that large companies, such as power companies and data centers, will want to join the buying wave, if the industry becomes more competitive and miners face tighter margins. , according to Peter Wall.

Some companies might also turn to mining to fund other parts of their business and improve their overall bottom line.

Cheap energy and ESG

As criticism of the impact of mining on the environment grows, finding renewable energy sources is all the more important to stay competitive.

“Energy-saving solutions will then be a determining factor,” said Arthur Leefounder and CEO of Saitecha mining operator based in Eurasia.

It is likely that the use of more energy-efficient machines, such as the latest Antminer S19 XP from bitmainenable businesses to operate more efficiently and reduce their impact on the environment.

An increase in investments

This year, the mining sector has seen a large number of IPOs and new funding from institutional investors. The maturity of the industry should allow this trend to continue in 2022. Currently, investors are using miners as a proxy investment for Bitcoin. However, the outlook for long-term investors is still unknown as this is a largely untapped market, warned Ben Gagnon of Bitfarms.

Supply chain uncertainty

“The chip shortage was one of the defining supply chain issues of 2021,” said Philip Salterchief technology officer of Genesis Digital Assets.

The spread of Covid-19 and rising geopolitical tensions between the US and China has led to a global chip shortage that has impacted 169 industries, from cars to soap making.

However, the sector is divided on whether this problem will be solved by 2022 and some estimate that the shortage could last until 2023. And when manufacturers are able to resume normal supply, major industries (those of mobile phones, medical equipment and transport) will unfortunately take priority over Bitcoin.

The second life of mining equipment

As a result of China’s mining shutdown and subsequent migration, thousands of machines have been left abandoned in the country. While many have already been shipped overseas, others are still available on second-hand markets which could experience increased activity in 2022.

Going forward, the newest equipment will first be deployed in regions with “stable laws and regulations as well as developed infrastructure”, such as the United States and Europe, said BitFuFu. Substandard devices will then be shipped to countries like Kazakhstan, Southeast Asia, and even Africa.

New technologies in the mining sector

Currently, miners are looking into using technologies such as immersion cooling to improve performance and reduce the cost of mining without having to buy additional machines.

“Besides reducing power consumption and noise pollution, this technique occupies much less space and does not require many tools to achieve better heat dissipation effect,” said Edward Luvice-president of Canaan.

CleanSpark recently completed the acquisition of 20 megawatts of immersion cooling infrastructure for its facility in Norcross, Georgia, and aims to increase its mining efficiency by more than 20%.

Riot Blockchainone of the largest Bitcoin miners in the industry, also said in October that it plans to increase its mining rate by up to 50% using 200 megawatts of immersion cooling technology at its facility in Whinstone, Texas.

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