Analysts See Slower Bitcoin Hashrate Growth in 2022 Amid Market Correction
The Bitcoin (BTC) network’s hashrate – or computing power that goes into mining new coins – could reach 327 EH/s by the end of the year, a research note from the crypto-focused financial services firm BitOoda has predicted, after the firm cut an earlier forecast for the year.
The latest forecast from BitOoda represents a massive rise in hashpower from last year, but is still lower than an earlier forecast from the same firm of 334 EH/s, the note revealed, while admitting that the hashpower for year-end 2021 also came in below its forecast.
“The year end 2021 Hashrate came in at 174 EH/s, below our previous estimate of 198 EH/s. The situation in Kazakhstan further pressures near term Hashrate. The longer lead time site development schedules in North America remain intact,” the report said.
The report stated that the long-term hashrate on the Bitcoin network is dependent on bitcoin’s market price, also noting that “other constraints” apply as well in the short term. Among these constraints are the availability of capital and mining rigs, price and availability of 240V single phase power, and “a supportive price environment that keeps rigs operational.”
As of Monday this week, the 7-day average of the Bitcoin network’s hashrate stood at 189.84 EH/s, data from BitInfoCharts shows.
The view that hashrate will continue to rise this year is also shared by the digital asset financial services firm CoinShares, which wrote in its Digital Asset Outlook for 2022 that all signs are pointing higher “barring any large-scale crackdowns by jurisdictions hosting large shares of the Bitcoin mining network.”
“If bitcoin prices keep rising and ASICs (mining hardware) remain available, hashrate growth will likely continue unabated throughout the entire year,” the firm said, before noting that “a major and sustained correction” in bitcoin’s price is the most likely threat for miners.
At 14:40 UTC, BTC was trading at USD 38,313. It was up nearly 4% in a day, trimming its weekly losses to less than 10%. It was also down 25% in a month and 18% in a year.
Meanwhile, according to a new research article from Fitch Ratings on Monday, crypto mining more broadly could pose a risk to the US power supply “unless they are sufficiently mitigated.”
Crypto mining is energy-intensive and requires “a considerable amount of power that can significantly increase a utility’s overall electrical load,” the firm said in its report. It added that a balance must be found between the prospects of increased electrical sales, and the commitment to generate “large amounts of power” for crypto miners.
Commenting today on the current state of the bitcoin mining industry for Bloomberg, Matt Schultz, executive chairman of bitcoin mining firm CleanSpark, said that his company relies primarily on newer Bitmain S19 Pro mining machines, meaning their operations are relatively efficient compared to miners who rely on older equipment.
“So even at USD 33,000 per Bitcoin we’re still tremendously profitable,” Schultz, whose company mines about 10 BTC per day with a cost basis of USD 5,000 to 6,000 per coin, told Bloomberg.
Quoted in the same article was Charlie Schumacher, director of communications at bitcoin miner Marathon Digital Holdings, who stressed that due to the bitcoin network’s design, more efficient miners are able to remain in the game longer.
“We are all competing for the same amount of Bitcoin every day,” Schumacher said, adding that Marathon would simply earn more coins if other miners were to shut down.