Bitcoin Miners Navigate Surge in Mining Difficulty with Strategic Growth and Energy Use in 2023
Summary:
2023 was a demanding year for Bitcoin miners with the considerable rise in global hash rates and mining difficulty. The annual report from Compass Mining showed a 103% increase in Bitcoin’s hash rate, paralleled by a similar leap in mining difficulty. Notably, Iris Energy and Marathon Digital registered significant growth, with other miners like CleanSpark, Hut 8, and Bitdeer also marking increases. Core Scientific emerged as the largest US-based Bitcoin producer, with Marathon Digital and CleanSpark following closely. To cover operational expenses, miners sold portions of their monthly mined BTC. Lastly, Bitcoin miners, lured by abundant and inexpensive renewable energy, effectively implemented energy strategies in Texas, cutting back energy use during peak hours, which resulted in substantial cost savings.
2023 was a rigorous year for Bitcoin miners due to the surge in global hash rates and mining difficulty. Compass Mining's yearly overview of the Bitcoin mining sector illustrated that the hash rate saw a 103% yearly increase, from 266 EH/s at the start of the year to 542 EH/s by year-end. The growth in Bitcoin’s difficulty paralleled the surge in hash rate, given it’s an inherent element in the Bitcoin mining protocol aimed to maintain a 10-minute average block creation time. Given the surge in global hash rates, the Bitcoin Average Difficulty rose from 35 T at the start of the year to 72 T by December 31. Multiple miners in the year significantly elevated their hash rates.
As highlighted by Bitcoin mining analyst Anthony Power, mining firm Iris Energy recorded exceptional growth in hash rate, from 1.7 EH/s at the year's start to 5.6 EH/s within a span of six months, a massive 273% increase. Similarly, Marathon Digital reported a significant rise of 253% in its operating hash rate in 2023, soaring from 7.0 EH/s to 24.7 EH/s. Other notable annual hash rate increases in 2023 included CleanSpark (53%), Hut 8 (188%), Bitdeer (168%), TeraWulf (150%), and Bit Digital (101%). However, Riot platforms only managed to increase their operating hash rate by 28% in 2023 due to unfavourable weather conditions.
In 2023, Core Scientific emerged as the largest Bitcoin producer among US-based miners, mining a total of 13,782 BTC despite ongoing bankruptcy proceedings. Marathon Digital and CleanSpark followed, mining 12,843 BTC and 7,391 BTC, respectively. Riot's production was 6,619 BTC, considerably lower than forecasted, as the firm's energy strategy in Texas played a role. The mounting hash rates compelled all miners to sell a portion of the monthly mined BTC to meet their operational expenses, but Marathon and Hut 8 held significant shares of their BTC treasury, with 15,174 BTC and 9,195 BTC respectively at year-end.
The report additionally highlighted the industry’s capability to adjust energy consumption to meet power grid demands, as evidenced by Bitcoin miners' operations in Texas, where ample, low-cost renewable energy has lured major mining firms. These miners have complied with Texas's ERCOT 4 Coincident Peaks (4CP) program, which offers incentives for reducing energy consumption during peak hours in the summer months. This strategic energy-use approach, enacted by miners such as Argo Blockchain, Bitdeer, Iris Energy, and Riot Platforms, have resulted in significant cost savings. Meanwhile, Riot Blockchain secured a long-term power purchase agreement in Texas, saving them from possible market volatility and resulting in $71.6 million in total energy credits, equivalent to 2,480 Bitcoin at the average 2023 price.
Published At
1/29/2024 6:53:22 PM
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