The crypto market has had a challenging year in 2022, and recent price movements of Bitcoin (BTC) suggest that bears are still exerting pressure. This situation is further compounded by the regulatory action taken by US lawmakers, who have requested energy consumption data from four major BTC mining companies. Despite these difficulties, most Bitcoin miners remain optimistic about the short and long-term prospects of the cryptocurrency.
Edward Lu, the Senior Vice President of Canaan, spoke with Cointelegraph about the current state of the mining industry and its relationship with the oil and gas and big energy sectors in the US and the Middle East. He highlighted the significant developments in the mining industry, such as the shift of Chinese miners to Kazakhstan and the subsequent movement towards the US market, particularly in Texas, due to the availability of cheaper electricity and favorable policies.
When discussing the impact of rising electricity prices and declining ASIC prices on mining profitability, Lu acknowledged the short-term challenges but emphasized the long-term viability of the mining industry. He explained that factors such as machine and energy costs, infrastructure expenses, and daily maintenance contribute to profitability. Lu estimated that the Bitcoin price should not drop below $15,000 for miners to continue making a profit.
Lu also addressed the upcoming Bitcoin halving and its impact on the efficiency of ASICs. He noted that while the mining reward decreases with each halving, the overall profitability of the industry remains intact. He emphasized that improvements in machine efficiency and decreasing energy consumption per terahash have allowed miners to adapt to changing conditions.
The conversation then shifted to the growing synergy between traditional energy sectors and Bitcoin mining. Lu highlighted how energy companies are utilizing wasted energy to power mining operations, which allows them to convert these energies into a storable value. He believes that this collaboration will drive the mass adoption of Bitcoin and contribute to the long-term success of the mining industry.
Lu also discussed the changing profile of Bitcoin ownership, with more institutional and traditional financial players entering the market. He believes that this legitimizes Bitcoin as an asset and aligns it with traditional financial markets. While he acknowledged concerns about the industrialization of mining and the entry of Wall Street into cryptocurrencies, Lu assured that Canaan remains committed to decentralization and enabling individual mining at home.
In conclusion, Lu expressed his confidence in the future of Bitcoin and the mining industry. He believes that the industry has evolved significantly in terms of technology, infrastructure, and the mix of individual and institutional players. He emphasized that the current crisis presents more opportunities than challenges, and that this moment is ripe for growth and development in the mining sector.
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