Bitcoin mining started out as a small endeavor taken on by a few individuals repurposing home computers to mint virtual coins that were, at the time, almost worthless. Fast forward to 2020, and Bitcoin (BTC) mining has become a formidable industry of its own, constantly growing and evolving alongside Bitcoin itself.
Today, the Bitcoin network’s hash rate is sitting at around 129 EH/s, acting in a similar way to the price of Bitcoin, even following the halving in October this year that saw the mining reward cut in half. James Bennett, CEO of ByteTree crypto data provider, told Cointelegraph that the trend is likely to continue: “The investment into Bitcoin’s network infrastructure is clear. You only need to look at the series of all-time-highs of network difficulty to see the rate new mining capacity is being added.” So, here’s how the mining industry is changing and maturing.
Public companies joining in
There has been a trend of high-profile investors, both companies and individuals, investing in Bitcoin and other digital assets. This is also becoming true for Bitcoin mining as public corporations, including Nasdaq-listed Bit Digital and others, venture into the industry and related activities.
As profits from Bitcoin mining rise back to their pre-halving levels, it makes sense why companies and individuals alike would want to invest in Bitcoin mining as an additional income stream, especially given that it proved to be fairly immune to the encumberments created by the coronavirus pandemic and widespread lockdowns. Whit Gibbs, host of the Hashr8 podcast, told Cointelegraph on the matter:
“A number of large companies have been exposed to Bitcoin mining for quite some time. Most notable of these is Fidelity. They have not only established mining operations, they have also been huge proponents of research and education in the industry. Another notable company with active mining interests is Horizon Kinetics.”
Access to capital
With new participants joining the industry, access to capital is imperative, and many digital-asset liquidity companies — such as Blockfills, Nexo and others — now cater to Bitcoin miners. This allows miners to expand their operations and have some wiggle room when they don’t want to sell Bitcoin for a low price.
Blockfills, for example, announced in May that it would be providing financial solutions to mining companies that wish to purchase new-generation ASIC mining equipment in North America. Since then, Blockfills has committed roughly $50 million in financial support to these miners. Neil Van Huis, partner and director at Blockfills, told Cointelegraph:
“Financial support is a primary function of any growing asset class. Our objective is to continue bringing traditional practices to our rapidly growing sector which fill voids and advance the space. $50M is really just the beginning. We have another $50–70M to get finished in the next few months and expect that we could have as much as $250M done by May…