Review of Bitcoin mining in 2022
We published our 2022 Year in Review on @hashrateindex today??⛏️
— Colin Harper (@AsILayHodling) January 11, 2023
2022 was a watershed year. There's never been as much interest in BTC mining, and there's never been as much money on the table – or as much to lose
Report below, highlights in this ?https://t.co/XwhWyF9A2s pic.twitter.com/UoXoPXI4ic
No surprise here to anyone paying attention, but hashprice hit an all-time low last year.
— Colin Harper (@AsILayHodling) January 11, 2023
The average USD hashprice in 2022 was $123.88/PH/day, compared to 2021's average of $314.61/PH/day? pic.twitter.com/NjXs5mXdop
At a time when miners are earning less per unit of hashrate than ever, power prices went on a tear. The average industrial electricity price in the US in 2022 was $85 per MWh, a 16% increase from 2021. pic.twitter.com/QzIgGfDl8j
— Colin Harper (@AsILayHodling) January 11, 2023
Before 2022’s energy price inflation, a reasonable hosting contract might offer power prices at $0.05-$0.06/kWh. Now, it’s not uncommon to see $0.08-0.09/kWh, and many hosting contracts are switching from the standard ‘all-in’ hosting terms to profit/revenue sharing models. pic.twitter.com/olqDYYJEw8
— Colin Harper (@AsILayHodling) January 11, 2023
An anemic hashprice and energy inflation have conspired to crush mining margins. At $60/PH/day at the end of 2022, miners operating an S19j Pro at power costs above $0.082/kWh are underwater? pic.twitter.com/ohqiho7POs
— Colin Harper (@AsILayHodling) January 11, 2023
New-gen (S19j Pro, etc) and mid-gen (S17, etc) mining rigs exited the year at all-time low valuations.
— Colin Harper (@AsILayHodling) January 11, 2023
A new-gen machine went for as much as $12k at 2021's peak. You can find them now for under $1,500? pic.twitter.com/BvCC9JhR5h
As mining economics soured throughout 2022, miners incresingly prioritized next-gen equipment like the S19 XP?️
— Colin Harper (@AsILayHodling) January 11, 2023
The premium per terahash (TH) for the S19 XP vs other rigs increased substantially throughout the year. pic.twitter.com/UvXBZ2qdtb
2022 was brutal for most all miners, but it was especially brutal for public bitcoin miners.
— Colin Harper (@AsILayHodling) January 11, 2023
Many lost 90% (or more!) of their value throughout the year. Even so, they managed to grow their share of hashrate to 19% of the total network. pic.twitter.com/iDGHjmVvWx
2022 was the year of the acquisition, something we expect to see more of in 2023?
— Colin Harper (@AsILayHodling) January 11, 2023
With two high profile bankruptcies (Compute North + Core Scientific) and financial stress across the board, there were many opportunities to purchase distressed assets. pic.twitter.com/KBIocgbmQQ
As the industry continues to concentrate in North America, mining pools on the continent are increasing their market share.
— Colin Harper (@AsILayHodling) January 11, 2023
North American pools account for 30% of total hashrate, vs 22% in 2021. pic.twitter.com/W1L8k9Dwjc
Ethereum's long-awaited merge to proof-of-stake occurred in 2022.
— Colin Harper (@AsILayHodling) January 11, 2023
As a result, GPU mining is effectively dead in the water, as no other altcoin PoW network offers sustainable rewards for the majority of miners.
Bitcoin is the only game in town now⛏️ pic.twitter.com/Jkes9gpcJV
Difficult as the year was, 2022 could have just set the stage for an even more tumultuous 2023.
— Colin Harper (@AsILayHodling) January 11, 2023
We predict more bankruptcies/acquisitions, cheaper rig prices, lower hashprice, and the continuation of other 2022 trends (see our predictions in the final chapter of the report)?️
Crypto bank Silvergate is facing a bank run after working closely with FTX
Crypto bank Silvergate is facing a bank run after working closely with FTX
— Genevieve Roch-Decter, CFA (@GRDecter) January 11, 2023
But US taxpayers just footed the bill for a $4.3 billion loan to help the bank stay afloat
Is this really something the government should be doing? ?
Silvergate is facing a crisis.
— Genevieve Roch-Decter, CFA (@GRDecter) January 11, 2023
Deposits fell from $11.9 billion to a low of $3.5 billion last quarter.
The company’s stock is down more than 90% in the last year.
Silvergate has scrambled to liquidate assets to meet withdrawal demands.
— Genevieve Roch-Decter, CFA (@GRDecter) January 11, 2023
To help with the liquidity crisis, Silvergate took $4.3 billion in advances from the Federal Home Loan Bank (FHLB).https://t.co/y61Q5nT02l
FHLB is a group of government-sponsored banks that provide liquidity to US banks with government funds.
— Genevieve Roch-Decter, CFA (@GRDecter) January 11, 2023
The $4.3 billion is a government-subsidized loan that Silvergate must pay back.
Of course all US banks have access to similar funding, but you’ve got to scrutinize the hypocrisy of Silvergate bragging about its “innovate” model and shunning traditional finance, just before taking out government subsidies from the very system the bank is supposedly disrupting
— Genevieve Roch-Decter, CFA (@GRDecter) January 11, 2023
According to Silvergate’s investor relations website, the company held cash of $4.6 billion at the end of 2022.
— Genevieve Roch-Decter, CFA (@GRDecter) January 11, 2023
How close would the company be to insolvency if they didn’t get that $4.3 billion infusion?
Probably pretty close.
— Genevieve Roch-Decter, CFA (@GRDecter) January 11, 2023
Silvergate was selling off assets at losses to cover its liquidity gap.
For example: “Silvergate sold $5.2 billion of debt securities…The sale resulted in a loss of $718 million during the fourth quarter of 2022.”
Silvergate’s stock has gone from a peak of about $155 to under $12 over the last year. pic.twitter.com/xsp4Waj304
— Genevieve Roch-Decter, CFA (@GRDecter) January 11, 2023
