By
Chimamanda U. Martha
April 24th, 2024
One of the reasons for the issues with bitcoin mining at the moment even beyond the bitcoin slump is the high energy usage necessary to run the mining calculations from these computers.
The months ahead will be very delicate for crypto miners. This is due to the recent bear trend that bitcoin – the largest cryptocurrency – has undergone on the blockchain. Bitcoin price taking a hit does not bode well for these miners who wish to not just mine but go public too.
Started by Satoshi Nakamoto, father of Bitcoin, mining in the blockchain is a word used to encompass the computational effort undertaken in the system through nodes to get new tokens. To explain in more pragmatic terms, crypto miners serve as auditors that check for the veracity of bitcoin transactions. This method through which new bitcoin enters the blockchain and is circulated is difficult and costly. Nevertheless, crypto mining has a way of drawing bitcoin miners and those of other cryptos because these miners get rewarded for their effort in the form of crypto tokens. The spreading out of crypto miners is spread all over the world, hence, the term ‘decentralized’ is given to the blockchain and crypto market.
Since the mining process is the only way to pump new BTC to the bitcoin network of the blockchain, miners are invaluable to bitcoin as are other crypto miners are to their respective crypto markets. To relate it to a term popularly used with NFTs, a bitcoin miner mints currency. Roughly 18.93 million bitcoins were in circulation out of a maximum of 21 million as of January 2022. If miners did not exist, Bitcoin would still be around and function, but there would only be a limited number around. No new bitcoin would be mined and thrust into the blockchain for circulation, transactions, and exchanges.
We should also talk about mining hardware, which is paramount to the success of any mining. One of the reasons for the issues with bitcoin mining at the moment even beyond the bitcoin slump is the high energy usage necessary to run the mining calculations from these computers. People and nations are concerned about the environmental effects of crypto mining of Bitcoin, Ethereum, and others.
China, which is well-known to be against crypto mining, are taking their crackdowns a step further. The Government recently hired a contractor to scrutinize any mining operation going on in the Mongolia region of the country. The Hebei province also announced that they would be tightening the limits of crypto mining in the area due to the large energy consumption of mining these cryptocurrency coins. It’s not only China. Other Asian nations like Kyrgyzstan caught over 500 cases of illegal cryptocurrency mining farms. They were attached to power grids against the law and this resulted in power shortages.
Bitcoin Production in the Coming Months will Determine a Lot for Miners Planning to Go Public
It’s easy to see why things are hard for aspiring crypto miners. The bitcoin slump, however, remains the primary problem facing these miners. The value of bitcoin has been steadily dropping in recent weeks and this price of bitcoin drop is warding off some possible investors. Companies like Core Scientific were on their way to making their organization public via a merger with SPAC as well as Rhodium Enterprises, a bitcoin mining group. This new fall in crypto prices could have a negative impact on their merger.
Crypto prices of bitcoin have suffered a plunge of beyond 30% on Redot just after reaching a historical peak of $68,000 in November 2021. This troubling trend has caused some miners to reconsider going public, as the data shows. A reduced number of mining companies becoming public during this downward dip of bitcoin has occurred. Using Rhodium as an example, the COO, Ethan Vera, said that there are some IPOs and SPACs that they want to check in the first six months of this year. It now looks harder than it initially did and he opined that companies looking to go public face a correction of prices and a congested crypto market.
That is not the news miners would like to hear, especially those considering going public. The issue is also that lucrative IPOs and SPACs are looking less desirable now than they did several months ago. One of the SPACs, TeraWulf – a bitcoin mining firm backed by actress, Gwyneth Paltrow – fell in its trading debut in December, with its shares being sold off shortly after. Stronghold Digital also suffered a hit, falling by over 50% since its debut in October as did Iris Energy, a fellow mining company, by the same margin after becoming public in November.
The hash rate of bitcoin shall be higher this year, meaning a more competitive market. Bitcoin price, though, keeps falling, which means potential investors will watch the best crypto exchange sites. They will also watch the miners see what they do and how things go, especially regarding the growth or depreciation of these mining companies. The ones able to separate themselves from the herd as successful amid all the competition will be the true victors
Chief Operating Officer of Rhodium, Ethan Vera, explained that for companies aspiring to be public bitcoin miners in this crypto market, the most important thing would be for them to set themselves apart from the existing bitcoin and other crypto miners. He pointed to the manufacturing values from the first two months of 2022 as great indicators for investors on the path these young bitcoin mining organizations will take when they go public. That being said, bitcoin investors would need to observe these newer companies for a longer time than two months before putting their hard-earned money into them. Eric Risler, a managing partner of Architect Partners, informed that there has to be a long-term plan from these miners if they want anybody to invest in them. As a high-ranking officer of the crypto mergers and acquisition firm, he has great insight and added that the ones who will succeed are the companies that can thrive work efficiently in the congested and unpredictable crypto market.