The Top 10 Financial Events in 2022, What’s Ahead in 2023

1. U.S. stocks fall

U.S. stocks experienced the biggest fall this year since 2009. As of December 19, S&P 500 index fell 19.9%, and the rising in past three years stopped. Moreover, the decline is much more severe than it happened in 2011, 2016 and 2019, and close to the year 2009 when the financial crisis happened.

The bearish second market and depleted liquidation are impacting the launch of new stocks from companies and venture capitalists.

2. Fed raises Fund rates

The Fed started to raise the rates to control inflation. The inflation resulted from the loose monetary policy due to the COVID-19 epidemic. The Fed rates raised 7 times in 2022, the most impressive one is the four consecutive rates raised by 75bps. The current fund rate is 4.25%-4.5% which is the highest federal funds rate since 2007. The loose monetary policy is also impacting the central banks of major countries such as China and Japan to raise rates accordingly.

The central banks need to make efforts to control inflation as well as prevent a recession, and they should find the balance.

3. Technology stocks fall

Technology stocks are hit severely due to the fallback of the global economy’s liquidity. Usually, technology companies are growth-type and the market is focusing on the growth potential in the future. However, rates hike is lowering those companies’ valuation.

For example, Netflix stock was quickly falling with the end of the work-from-home policy in developed countries, and the same happened on similar stocks with the work-from-home conception. META ( known as Facebook) stock fell because of the unexpectedly high cost, and the project can’t pay back to investors in short term. Amazon stock is also falling with the bearish mood spreading and the rising risk of recession. The stocks of the three technology companies fell by 50% in 2022.

4. Cryptocurrency prices fall

The current price of Bitcoin is under $17k, which is around a 75% fall compared to the ATH of $66K on November 10th, 2021. Below are the Bitcoin prices today in history.

In 2022, some disappointing events happened, and the whole market is in a bearish mood.

  • LUNA crash

LUNA price fell from $80 to a few cents by May 12, 2022.

  • FTX crash

FTX Trading Ltd., known as FTX ( Futures Exchange), was founded in 2019, headquartered in the Bahamas. FTX has been in Chapter 11 bankruptcy proceedings in the US court system since November 11, 2022.

The peak of FTX was in July 2021, and it had over one million users and was the third-largest cryptocurrency exchange in volume.

  • Core Scientific filed for bankruptcy

Core Scientific Inc., is a crypto mining company, headquartered in Austin, Texas. It is listed as NASDAQ: CORZ, and its market capitalization was $46.47 million by November 30, 2022.

Core Scientific filed for Chapter 11 bankruptcy protection in December, and the stock is down 98% during the year.

5. Russia-Ukraine War

The Russia-Ukraine war began on February 24, 2022. The war results in inflation and economic recession.

With the outbreak of the war, the prices of gas and oil raised significantly which was $123 on Mar 8, 2022, then down to $73 currently. The war also impacted the price of food in a short term.

6. Recession risk in Europe is rising

European economy is facing the rising risk of recession by the impact of Russia-Ukraine conflict, power supply chain strain and rising rates by central bank.

European Central Bank has raised interest rates by 200bps in three meetings, and it’s the fastest record ever.

According to the 2023 macroeconomic outlook of the Institute of International Finance, the slowdown in economic growth will be dominated by Europe next year. Because Europe is the major region affected by the war conflicts, and the market confidence dropped sharply. The euro zone economy is expected to contract by 2% next year.

7. HK stocks rebound impressively

Hong Kong Stocks were weak due to global economic recession but rebound impressively afterwith the new epidemic control policy operated.

The Hang Seng Index rebounded by 35% from the bottom in October. Stocks such as medicine, technology and real estate were the top rebounders. Some stocks experienced 200% rising in short term.

8. breakthrough in stock audit cooperation between China and U.S.

The U.S. and Chinese government reached a Statement of Protocol Agreement regarding cooperation on inspecting the audit work papers of U.S.-listed Chinese companies on August 26, 2022.

On December 15, 2022, the PCAOB ( Public Company Accounting Oversight Board) announced that it has secured complete access to inspect and investigate audit firms in mainland China and Hong Kong for the first time in history. At the same time, some Chinese stocks experienced the historical rebound.

9. Investments inflow and outflow from China

The first net outflow happened from Mar 9, 2022 to June 1, 2022, and the second happened from Oct 24, 20222 to November 10, 2022. As of December 20, the cumulative net inflows are $118 billion ( 825 billion yuan) which is at the lowest record since 2016. Comparing to the net inflows which are $618 billion in 2021, this year is down 81%.

10. Global investors are bullish on Chinese stocks

With cancelling the zero-Covid policy, the daily life and work in China are back to normal progressively. Chinese economy is starting to recover in next year.

What’s more, the National Immigration Administration of China announced on December 27, 2022 that they will optimize policies and measures of immigration administration starting from January 8, 2023. The policy will resume in an orderly manner the acceptance and examination of the Chinese citizens’ application for ordinary passports for the purposes of tourism and friends-visiting abroad. Same will be resumed for foreign visitors.

What’s Ahead in 2023

Here comes the economy outlook of 2023 by JPMorgan:

  1. U.S. economy likely to slow further in 2023, enter a mild recession
  2. Fed’s hiking cycle nearing the endgame; terminal funds rate expected to reach 5%
  3. Consumers enter 2023 on solid financial footing, but with less cushion than in 2022
  4. Manufacturing sector headwinds are building; services still benefitting from normalization
  5. Housing market activity likely to stay low with mortgage rates high
  6. Inflation set to fall quickly from peak, but remain above the Fed’s 2% target at end of 2023
  7. Labor market should start to loosen amid slower growth environment
  8. A stronger dollar has mixed implications for the economic outlook
  9. Supply chains getting back to (new) normal
  10. Expect improved credit market conditions in 2023, but also higher spreads and defaults

How do ETH miners feel about the Merge?

So the Merge is on the brink of happening…finally.

Excitement and jubilation are in the air. But not everybody is looking forward to this monumental moment.

Those miners are just different eh?

To recap a bit, for those who have been living under a rock, Ethereum is on the verge of upgrading its consensus protocol from a Proof of Work network to a Proof of Stake network. Proof of Work required the processing power of many specialized computers to run highly complex mathematical computations, such as SHA256. With Proof of Stake, miners can participate by staking a minimum amount of ETH in “pools” to have a chance of being part of the consensus protocol. No 3rd party computing machines are necessary and some may say this is beneficial to the environment as less energy intake is needed. In Bitcoin, Proof of Work is still the main consensus protocol which has been one of the leading reasons Bitcoin is so decentralized. But Bitcoin does receive flack for using a lot of energy.

So considering Ethereum’s Proof of Work will slowly become obsolete, this leaves its existing miners in the dust with what to do next. There will be no more ETH for them to mine for using their hoards of GPU miners. This is reflected in the markets for GPUs as well. For example, NVIDIA GPU prices have taken a beating over the past few months. A NVIDIA RTX 3090 GPU in May 2021 would have cost over $3,000. Now that same GPU is selling for just under $930 which represents over a 70% drop in price.

Some mining companies such as Hive Blockchain and Hut 8 Mining Corp. have released updated business plans to reflect how they will deal with the post-Merge. Hive, a publicly traded company, plans to explore other blockchains to continue its mining operations. Hut 8 Mining, another major miner, will meanwhile pursue ventures outside of crypto1.

If you think about it, a lot of mining revenue is going to be funneling to other validators on the Proof of Stake network. Ethereum miners generated $733 million in revenue in August 2022. The question then becomes, how will those POW miners make up for that loss of revenue?

Many other miners are looking for creative ways in repurposing their plethora of running GPU rigs. Some have decided to use them for supporting cloud computing, artificial intelligence, Machine Learning, or VFX rendering services to customers.

Even some miners are looking to redirect their hashrates towards another forked Ethereum token, Ethereum Classic. The token ETC, over the past few weeks, witnessed network metrics surging to lifetime highs and ETC tokens gaining value in a mostly little-changed crypto market. The Ethereum Classic hashrate reached over 48.64 terahashes per second (TH/s) as of Tuesday morning, having surged more than 133% since July 2.

Some other PoW coins have also been a hot choice for Ethereum miners to pivot to. Other coins suchs as Ravencoin, Bitcoin Gold, Monero, and ZCash have seen some interest recently. Many miners originally were not optimistic that the Merge would even happen at all, but now that it is, many miners are feeling a sense of sadness knowing that their profitable venture is going away.

Some have even decided to stick it through by opting to continue to mine the ETH PoW token when the Merge happens. These miners, although a very small bunch, believe in the soon-to-be forked coin when it happens. Many in the space don’t think this ETH PoW token will gain traction or popularity, but many can also make the argument that Ethereum Classic is still around. The crypto space is not entirely filled with all profit seekers, but rather many in the space are in it for the tech and its altruism.

For the past year, Ethereum hashrate has been quite steady with hashrates peaking around May of this year. Ironically, many miners have been loading up on hashrates to take advantage of the last seconds of PoW mining on Ethereum. But after the Merge completes, expect to see a load of miners halt their mining operations.

Perhaps a win for the environmental sustainability proponents but maybe a loss for the Proof of Work diehards who say that form of consensus as the most optimal form in cryptocurrencies. Or perhaps many miners would also pivot their hashrates to the king of PoW, Bitcoin. Maybe Vitalik, the founder of Ethereum, will somehow plan to incorporate mining back into Etherem. Then again, earlier when New York State Senate lawmakers passed a bill that will halt permits for new cryptocurrency mining facilities, Vitalik was completely against it ‘I oppose banning proof of work’.

Who’s a fan of fans?

Let’s get technical with ASIC fans.

In this article, we’ll get technical a bit in talking about those loud but necessary fans on bitcoin ASIC miners. Because let’s face it, bitcoin price action has been dull over the past month and it is our duty to not only educate our community on what’s going on in the bitcoin mining markets but also on the technology surrounding mining.

Let’s get started on some basics of ASIC fans.

We’ll use the Bitmain Antminer 17 and 19 series in the next few examples considering their popularity on the market. Fan sizes are usually about 120mm*120mm*38mm. Please refer to the reference below to get a better grasp of the dimensions in relation to size.

The fan speed of the 17 and 19 series miners is 6000 rpm and the air output is 315CFM. RPM refers to Rotations Per Minute, which is how many complete cycles is the fan generating every minute. To give you some reference, a car wheel rotates at 1,120 rpm at a speed of 80 mph. The power a Formula One engine produces is generated by operating at a very high rotational speed, up to 20,000 revolutions per minute (rpm). However, they are electronically limited to 15,000 as of 2021 season.

A full list of Bitmain’s miners and its corresponding fan speeds can be found here:

Damage to ASIC fans are not that uncommon. For example, damaged blades can occur which will cause the mining machine to vibrate, which subsequently will also damage the miner itself. In any case, if a fan is damaged or abnormal, it is suggested to be replaced asap.

Now let’s talk about the sound from ASIC fans. Something many people are quite familiar with even if they aren’t into bitcoin mining.

An example of the sound level of just a single fan running:

It is no secret that the noise pollution from these fans is an issue. Especially when hoards of ASICs are sitting together in a room located near a small community, complaints from locals can arise causing friction between bitcoin miners and communities.

A single bitcoin mining machine produces between 70 to 90 decibels (dB) of sound. Decibel levels scale logarithmically, so if one relatively-quiet machine produces 75 dB, then 10 similar machines produce 85 dB and 100 machines produce 95 dB. For comparison, the average nightclub maintains a noise level of 98 dB — almost deafening. Noise and other mining externalities turned a small town in North Carolina against its local bitcoin miners. Residents in a rural Ohio community complained to their city’s planning commission about noise levels from a nearby mining facility. As did Niagara Falls residents. And residents of Sherbrooke, Quebec and residents of Labrador City, near Quebec.

But there are ways to mitigate the noise and become more neighborhood friendly.

Some bitcoin mining companies, however, have opted for slightly less technical solutions for their noise. One natural-gas-powered, off-grid mining site, for example, erected rows of hay bales behind its on-site mining facilities to shield nearby residents from the noise. For mining facilities without easy access to hay bales, the possibilities for alternate tools and materials for noise reduction are nearly endless, including soundproof tiles, various acoustic barriers, prefabricated noise-dampening enclosures, noise insulation foam and more.

Depending on how the setup is architected, home miners could annoy their closest neighbors with mining noise, too — even with a few machines. In these situations, tools like the Black Box from Upstream Data are essential. This fire-and-weather-resistant enclosure cuts a machine’s noise level in half.

Immersion cooling is another sure-fire technique for not just reducing noise, but eliminating it altogether. After all, a mining machine’s highest decibels are produced by the thing that keeps it from overheating and melting: high-velocity fans. Remove the fans, submerge the hardware in dielectric fluid and the noise disappears. Analysis on immersion cooling from Braiins Mining corroborates this.

There are some small teams introducing “silent” fans to the market. For example, at, they have boasted their fans can be reduced by half to between 33–47 dB.


Bitcoin people can be loud. Bitcoin twitter is loud. Bitcoin miners are also loud. Let’s do our part and try to reduce the loudness of some aspects of this network. Because at the end of the day, some people hate loud people and loud things.

The heat on bitcoin mining

It’s hot out, but what else is putting the heat on miners?

As the entire bitcoin industry has fallen into a slump after multiple “rekt” moments of centralized mishaps, the bitcoin networks still continue to churn thanks to its splendid design of Proof of Work. It is a positive feedback loop with an emergent consensus that solves the issues of centralization. But unfortunately, other crypto projects still haven’t figured out how to implement decentralization, ultimately leading to their downfall. With bitcoin, price movements and nefarious centralized players don’t matter. Proof of Work’s mining game is the ultimate universal player that will unilaterally continue to sing the tune of metal churning ASICs.

Mining over the recent few months has surely been affected by a variety of factors. Bitcoin price being one, but also demanding energy developments globally. All this has pushed the hashrates lower as profitability becomes squeezed for miner profit margins.

On-chain data also explicitly shows how mining difficulty has dropped more than 3 consecutive times.

Hashrates have subsequently dropped over the past 180 days to levels last seen in January of this year.

And as you guessed, miner revenue has dropped significantly over the same time frame.

Many miner insiders see this trend continuing over the next few months as many believe the bear market has started. Historically, bear markets can last at least 2 years at the minimum as many in the industry lose hope and bailout. But this time around may be different.

Another major factor is the drop in mining difficulty and hashrates is the sustained brutal heatwave punishing the US at the moment.

Actually, this heat wave is being felt globally everywhere, not just in the US. But it is being felt particularly heavy in most of Texas. This has prompted many miners to shut down operations in an attempt to lower overall electricity costs for residents as energy usage demand from ACs has skyrocketed.

It’ll be interesting to see how this mining fatigue plays out over the remainder of the year. The conundrum that we have is how the perceived effects of global warming are going to affect bitcoin mining. Miner rigs need to be cool but it’s getting hot out, a catch-22. Many global sustainability advocates continue to bash the side effects of bitcoin mining. The supposed reason China banned bitcoin miners in the country is that the emissions generated by bitcoin mining exacerbate climate change and are incompatible with the country’s goal of reaching carbon neutrality by 2060.

So if bitcoin mining is a culprit of climate change, then should it be banned? Or should some other energy-consuming industry take a step back on their usage? Is this a moral or political decision that should be decided by the market? Or by the government? The fact is that bitcoin, to some is useful, while to others it’s useless. In the long run, the market decides on what it considers useful and it is only a matter of time where the world will use bitcoin as the only monetary standard. When this happens, it’s only inevitable that bitcoin mining will increase not only in hashrates, but in miner rig count, mining farm count, and any other factor of bitcoin mining will increase.

But sometimes the critics of bitcoin mining get it wrong. It’s not a question that the media loves to throw dirt on the amount of energy wasted from bitcoin mining. But at the same time, critics naively try to argue whether bitcoin has any legitimate claim on our world’s resources. This question is a silly, utilitarian logic about which industries/people are entitled to use certain energy resources. Most people don’t reason like this and critics themselves are flabbergasted when they come to find how much energy other industries/activities use. Ahem…many other major industries use a lot more energy.

Also, critics naively extrapolate energy source usage to its corresponding CO2 emissions. As Nic Carter puts it, “energy is not globally fungible”. Essentially, not all energy is the same. This is similar to outsiders only looking at bitcoin for what its recent price action is doing. Bitcoin is not just about market price, nor is it just about CO2 emissions. It’s much more than that.

Most bitcoin mining rigs have a max temperature limit of around 90 to 100 degrees Celsius. Sure it’s getting hotter outside, many places hitting over 40 degrees celsius, which is affecting many bitcoin mines, but it’s safe to say that we are a long way from shutting down the whole network. In fact, we are nowhere close. Bitcoin is resilient in the fact that it listens to noone, and is affected by noone. It is the beautiful emergent consensus that makes it indestructible from critics.

How to Further Decentralize the Hashrate

After the China ban, are there too many miners in North America?


An important topic that was discussed on another mining panel during the Bitcoin2022 conference was “How to further decentralize the hashrate?” An important characteristic of bitcoin is that it is decentralized in all aspects. From bitcoin users, to developers, to node runners, and especially amongst miners.

The dangers of centralization amongst miners has been a hot topic when a majority of hashrates were coming out of China. But ever since the final China ban on mining in 2021, a lot of miners took their operations outside and into North America. So now is there too much hashrates coming out of North America?

A panelist consisting of the below industry leaders took the time to chat about this burning question.

Whit Gibbs CEO, Compass Mining

Bob Burnett CEO, Barefoot Mining

Stephen Barbour Master of Hash

Ryan Condron CEO, Titan

Difference between decentralization and distributed

To start off, there are a few factors to consider when discussing “decentralization”:

  • ASIC manufacturer
  • Pool Ownership
  • Mining farm ownership
  • Ownership of energy

Also, it is important to note the differences between decentralization and distribution. Distributed, in the context of hashrates, can mean hashrates being distributed in different geographic areas. Whether this is referring to hashrates being spread out in different areas of a country or even different areas of a state. As long as hashrates aren’t in one specific location, then it is by definition distributed. But decentralization takes it to a whole different level. By being decentralized, the ownership factor takes precedence over the location. Ownership of hashrates, mining farms, and mining pools can determine if hashrates are truly decentralized. If we look at it from the context of pools, well one can make the argument that the top 5 major mining pools own a majority of hashrates. And it’s this factor that we need to worry about.

Is mining centralized now?

Burnett is personally worried about centralization in the US as more and more mega-farms start to come online. As mentioned briefly before, China decided to ban all bitcoin miners out of the country in mid-2021. This set off a huge exodus of bitcoin miners out of the mining-rich region of Sichuan. Many of them went to Iceland, Russia, Kazakhstan, and even Southeast Asia. But a majority of them went to North America due to favorable local regulations and a vibrant bitcoin community. But since the speed of mining farm development and construction is a lot slower than it is in China, many of them weren’t able to come online right away.

But in 2022, many of them are poised to open back up with a vengeance. And this is what Burnett is worried about. Since mega-farms are at times owned by the mining pools or even big institutions, are the mega-farms essentially in the control of a few hands? Are these institutions focused on what is right for bitcoin? Are these institutions controlled by the government? Are these mega-farms just making the big players even bigger?

Condron pointed out how most hashrates are controlled by 5 major pools. At the moment, the top 5 major mining pools for bitcoin are Foundry USA, Antpool, F2Pool, Binance Pool, and ViaBTC. They own about 70% of the global network hashrate. This should be an alarming amount to some as this is what is considered over the 51% attack threshold.

How to further decentralization?

Barbour mentioned that not only should miners be using downstream (aka peak privacy) energy supplies, but also upstream (peak efficiency) too. He compared ASICs to being like engines. Eventually, they will be a commodity and much cheaper for the retail market. Barbour’s company, Upstream Data, produces specialized outdoor boxes for at-home miners to house their ASICs in a safe and efficient manner. These boxes allow for the ASICs to run cool, and secure, and to trap the sound from coming out.

Barbour also stated to put it into perspective, bitcoin since the start has been decentralizing, slowly but surely. So don’t rule out home mining ever. Even though home mining doesn’t get the attention anymore due to the mining farm industry, that doesn’t necessarily mean there aren’t home miners. It’s probably bigger than what it was before and this should be expected to increase.

Gibbs “Everyone needs to be running an ASIC”

Whit Gibbs, who is the founder of Compass Mining, reminded us that everyone should be running an ASIC machine. If you are holding bitcoin, then you should run an ASIC as well. It’s part of the holistic nature of being in bitcoin. Besides holding your own bitcoin private keys, one should also run their own node, and mine their own bitcoin. That is truly the complete bitcoin experience of self-sovereignty.

Burnett would love to see all large-scale mining farms have their own mining pools. And for every bitcoin stakeholder to have their own mining pool.


The one thing that these panelists can conclude is that home mining needs to be more prevalent than large-scale bitcoin mining farms. If the ownership of each hashrate is in the hands of 1 person, decentralization can be further exercised in a way that is meant for the bitcoin network. But if we keep throwing ASICs to large-scale farms, then decentralization will become less and less. Both are needed to keep mining improving and scaling, but home mining needs to have more importance on the network.

Financialization of Mining

Mining makes money, but first it needs money…

Bitcoin2022 hosted many amazing panel sessions to learn more about some of the best in the industry. There was a whole stage dedicated to panel discussions on mining. And that’s what we’ll be bringing to you all. We’ll be recapping some of the best mining panel sessions into an easy to read format so that you can all be caught up with some of the best insights and takeaways discussed at Bitcoin2022.

In this blog, we’ll recap the the panel session titled “Financialization of Mining” featuring:

Brian Wright, Galaxy Digital

Ethan Vera, Luxor

Zachary Cefaratti, Dalma Capital

Leo Zhang, Anicca Research

So what does this exactly mean? Well it refers to the financing and capital raising amongst miner companies. We all know mining can be very capital intensive. There needs to be enough money to purchase ASICs, a support and maintenance staff, land, buildings, and other engineering infrastructure to keep those ASICs churning. This all can total to a couple of million dollars real quick. Miners need to be able to raise capital in order to fund these operations. And lenders and other traditional capital financiers are attracted to the kind of returns they can expect from such a booming industry. This is where the two meet to agree on what type of capital financialization is need to start mining.

The panel session had a bunch of great topics which have been summarized and broken down below.

State of the Mining Capital Markets

The state of the capital markets for mining is undoubtedly the strongest it has ever been. And every year that maturing increases to the point of attracting more institutional investors in the space. Some may even say the maturity and efficiency of capital markets for mining may need to be even more efficient than the efficiency of miners themselves. Lenders need to be in the clear as to what they are investing in. With that, miners need to be transparent to lenders as to the type of returns they should expect. Despite bitcoin’s popularity rising over the past year, there still is a misconception of what mining is amongst traditional financiers. And this is where miners need to be able to close that gap through proper communication.

Back in 2018, many miners had a hard time raising money. It was hard just to get a loan for about $2 million dollars but now you’ll see many mining companies raise over $40 million dollars. Miner companies have been the only sector of the crypto space to see companies go public on the stock market as well.

Up until now, there has been more equity-based financing than debt-based financing. But debt-based financing is starting to see an uptick due to open lenders. And this spawns new financial innovations such as ASIC-backed loans. This new type of financing allows miners to put up their ASICs as collateral for funding. ASICs inherently have value and have become a secondary commodity behind bitcoin itself. And with ASICs also having a healthy market, lenders and financiers can feel more comfortable using it as a form of collateral for their money. Sometimes the mining company’s infrastructure and land are used as collateral, in a similar sense as other traditional industries.

NAV of Miners

The NAV of ASIC miners was also a strong talking point during the panel session. For those who do not know, NAV refers to the net asset value. Essentially it’s viewed as the current market price one could purchase an ASIC miner for on the open market. This metric is quite important if ASICs are going to be used as collateral for financing purposes. It’s the same way as to how a house is used for collateral on a mortgage. If the borrower, or miner, would default on the loan, the lender would come in and own all the ASICs.

It’s a challenging collateral to value so lenders and financiers rely on the NAV of an ASIC. And sometimes they are overvalued due to high optimism. For example, some miners are getting NAVs of $300 — $700 per TH despite being able to purchase ASICs for an average of $80 per TH on the open market. Their financiers and lenders need to be careful and look at certain factors. Financiers need to discount ASICs that haven’t been turned on yet or ASICs that haven’t even been delivered yet.

It’s also prudent for lenders and financiers to analyze the mining company’s team itself. What is the team background like? Do they have experience mining? How long have they been mining? These questions are just as important as the ASIC miners themselves. And sometimes it just comes down to how much risk tolerance these financiers can take. If their risk tolerance is large, they are willing to work with the mining company more.


Ethan Vera and Leo Zhang have always been a proponent of hashrate contracts. Although this hasn’t really been accepted by the market yet, Ethan made a verbal push that he thinks it will become more important in the next coming years. Eventually, it will become more prominent and investors will realize how useful it can be for miners themselves. Being able to hedge your hashrates and buy futures on it can definitely be a great method for miners to protect themselves during a bear market.

Also, investors need to realize that hashrates are attractive due to their increased physical ties as compared to bitcoin. It touches on renewable energy, Moore’s Law, chip production, and other physical real-world topics that can influence hashrates.

What’s Next

The future looks bright for miner financing. Lots of traditional and institutional players are coming in to provide funding and loans of all sorts. But it’s also good to know that miners need to realize there are a lot of other financing options that they can take advantage of. Bitcoin native DeFi is also going to play an integral role in future markets. Financing the old, traditional way will probably fade away in the next few decades.

It will also be interesting to see if there will be a trend in M&A (mergers and acquisitions) activity amongst miners. We could expect to see many miner companies struggle during a bear market, which at the same time presents great M&A activity. And the last thing the industry needs to focus on is providing miner financing globally. If a lot of the miner financing is just concentrated in North America, hashrates will just be centralized within this continent. Financing needs to stretch globally to ensure there is globalized decentralization.

State of the ASIC Market

What’s next for ASICs?

The annual Bitcoin conference, this year dubbed Bitcoin2022, always brings out the best and brightest of bitcoiners to the forefront. It’s usually the most anticipated bitcoin conference of the year and probably the longest-running bitcoin conference in history. The focus and theme are squarely on bitcoin but you’ll see a few “crypto” people wandering the halls as well.

The conference hosts dozens and dozens of panelist sessions boasting experts to share about some of the old and new things happening in the space. They touch on topics such as government regulation, open-source development, security, wallets, exchanges, and of course…MINING!

In the next few blogs, we’ll be recapping and sharing some of those specific mining-themed panel sessions with our community in a way that is informative and educational. Mining is constantly evolving and it is our duty to be on the top of the cutting edge tech to increase our competitiveness as well.

For this blog, we’ll start with talking about the state of the ASIC market. Below are the major talking points discussed around this topic during the panel discussion featuring Chris Mansano, Kristy-Leigh Minehan, Nishant Sharma, Yao XianJun, and Michael Francis.

What is the general outlook of the ASIC miner market?

The general consensus is that newer generation ASICs, such as the S19 and S19 Pro+ Hydro, are looking ready to be shipped out this year. These new ASICs boast a capability of churning out over 100 TH/S with the S19 Pro+ Hydrop capable of hitting 200 TH/S. The big manufacturers such as Bitmain, Canaan, and What’s Miner all seem to have a positive outlook on getting their miners shipped out in time for customers. This is of course contingent on any sporadic covid lockdowns and the what not, but for the most part, most manufacturers have a strong outlook this year for their particular ASIC models.

Are we going to get smaller ASIC chips?

The takeaway is that moving from a 7 to 9-nanometer chip size to something smaller, such as a 5-nanometer, isn’t really grabbing the attention of miners. And in fact, most of them have a neutral view on this, as if it’s not an important metric they are excited about. Rather they see getting to a small chip size is going to take longer than expected. So in actuality, a smaller chip size really isn’t something they are excited about.

Most miners anyways are extracting more value from the ASIC machine by doing their own physical adjustments and tampering with the machine once they receive it. This is common practice amongst miners. By tinkering and performing experiments with the ASIC machine, some miners have been able to gain more performance compared to those miners who just use the machine as is from stock.

So although a smaller ASIC chip size may sound appealing to outsiders and new miners, many OG miners have their own way of extracting more performance from each individual ASIC miner.

What has been the difference between the mining market of 2016–2018 compared to 2020 to 2022?

The mining market during the years between 2016–2018 can be characterized as still being green. Green means very very early. Many people getting into the space still didn’t understand the notion of mining, let alone understanding how bitcoin works. There was less education out there when it came to mining. A proper framework and blueprint for scaling industrial-sized mining farms just weren’t available or documented.

Local jurisdictions and local regulations are also more mature now. They understand the concept of mining and have some basic legal framework in allowing more leeway for new miners to come in and set up shop. What’s been learned in the past has been evolved in a way now to benefit both miners and the local community.

Mining manufacturers during that time as well weren’t probably scaled to handle hundreds of thousands of miners. It was a time when the bitcoin surge was quite unexpected and underestimated amongst many miner companies.

When we fast forward to the years 2020 to 2022, manufacturers have definitely been able to scale up operations, but the biggest setback was the pandemic. The pandemic, unfortunately, closed down a lot of operations and factories. Supply chains were cut short and disturbed. People were unable to leave their homes to see the whole process through.

Trends for mining at home.

We’re starting to see a lot of mining come back to the comfort of home. Many people new in the space that truly believe in the altruism aspect of bitcoin want to mine bitcoins on their own rather than having their miners “hosted” somewhere else. But despite the inconveniences ASIC miners may bring to a household, there have been many ingenious setups to mitigate the loud noise and energy consumption coming from ASIC machines.

There have been home mining trends such as immersion cooling, where ASICs are sat in a tub of special liquid allowing the miner to still run while muting the noise. If anyone has ever tried to run an ASIC machine at home, they’d be quick to realize the annoyance of the noise it can bring.

What to look out for from new manufacturers in the space?

There have been many new chips and ASIC manufacturers coming into the industry with the hopes of disrupting the power players of Bitmain and others. But there are some red and white flags people need to be aware of before doing business with any of these new players.

Red Flags that you need to look out for:

  • Do they open source their tech?
  • Can they explain how their tech works?
  • Does their tech look similar or different from their competitors?
  • Who is part of their founding team?
  • How do they plan to scale?
  • What is their roadmap?

All in all, ASICs still have a bright future in this space. It’s been the longest-running technology used for mining over the past few years and they seem to be staying for a lot longer. As in the past, CPUs, GPUs, and FPGAs were once a fad but then quickly faded away due to being obsolete, one can only wonder when ASICs lifetime will take an end. But for now, there is nothing more fitting than loud humming ASIC machines and bitcoin mining.

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Will bitcoin ASIC miners still be dominated by the Chinese?

Bitcoin mining, for the majority of its current lifespan, has been dominated by one country in almost all aspects. That would be the country of China. At one point in time, China dominated the global bitcoin mining hashrate with over 65% of all hashrates coming from a bitcoin mine located within the borders of China. But like with everything, the tables turn.

Last year around May, the inevitable came as the Chinese government banned all bitcoin miners from mining in China. Almost all the large scale miners were forced to shut down and move operations overseas. Most of them went to the US as crypto friendly regulations started to arise with the popularity of crypto during the 2021 bull run.

At the moment, the large majority of bitcoin mining hashrates are coming from North America, which includes the US and Canada.

But China still dominates in another area of bitcoin mining. And that is bitcoin ASIC miner manufacturing and chip design.

The large behemoths of Bitmain and MicroBT have been dominating the ASIC space for the majority of bitcoin’s life. Early movement, proprietary design, strong supply chain, agile manufacturing, and years of experience have given both Bitmain and MicroBT a large moat in their competitiveness.

Along the years, a few companies have tried to come out with their own ASIC design and architecture only to quickly realize that they are no match for the ASIC kings.

But just earlier this year, Intel announced their intention to manufacture a rival chip to Bitmain’s. At a mining initiative earlier this year, Intel revealed their first-generation BonanzaMine chip and is ramping up for the second generation. This made huge news in the mining scene as Intel’s reputation gave this announcement strong credibility.

A few mining companies have already made purchases of the Intel mining chip, such as Block Inc., Grid Infrastructure, and Argo Blockchain. They expect to be able to receive the new chips later this year in 2022.

Many people have already speculated that Intel’s entry into the bitcoin mining scene could weaken the Chinese manufacturers’ pricing power and dominance. Now that many miners are located in North America, proximity to the California-based Intel could improve supply chain movements and maintenance care extended to buyers.

In any industry, competition is healthy. It motivates innovation, newcomers, adaptability, and the long-term sustainability of the industry. Many believe Bitmain and MicroBT have been the leaders for too long and think that new rising competition could help the industry overall.

One aspect that miners are looking forwards to is the fixed pricing model of Intel’s chips. At the moment, Bitman and MicroBT only supply their ASICs on a variable pricing model. This uncertainty is sometimes unwarranted from buyers and large-scale miners that need confidence in pricing to balance profitability.

“Prices of pre-ordered machines are updated every day within that range based on the manufacturers’ internal pricing models. Bitcoin’s spot price and the payback period, which is the time needed to break even, are key factors in these models” — Nick Hansen, chief executive of Seattle-based mining pool and hardware brokerage company Luxor.

Tong Lai, head of Singapore’s Babel Finance which provides lending services for Bitcoin miners, has stated that Chinese miner makers do not sell machines at a fixed price. The reason being is that they do not have much control over its suppliers’ pricing costs. This disables them from having future certainty to prices and profits.

Details on Intel’s second-generation chip, such as power efficiency and pricing, are yet to be available and some miners are skeptical of the significance of Intel’s entry into the industry. Intel revealed its first-generation chip has the power efficiency of 55 joules per terahash falling far behind Bitmain’s latest model, according to Intel’s paper submitted to the International Solid-State Circuits Conference. The details on its second-generation product, which is what the buyers are purchasing, will be released at a later time, a spokesperson from Intel told Bloomberg. (1)

But familiarity and location are a huge plus for North American miners. Intel, being a world leader in many aspects of the computer industry gives miners the assurances that Intel puts quality at its top priority. The location also allows Intel to provide enterprise-grade maintenance programs for miners which may allow for mining rigs to have a longer shelf life.

Time will tell on whether Intel can pull some market share away from Bitmain and the other Chinese ASIC manufacturers. The chip and semiconductor manufacturer market share are still dominated by a few companies, let alone the bitcoin ASIC miner space. There is a great piece that summarizes the current state of the land when it comes to semiconductors done by Compass Mining which can be found here.

Intel is going to need a lot of resources and networks in order to break in and make a huge impact in the mining scene. If they really are able to get a large market share in the US, then they could have some positive momentum. But if miners all over the world are still content with using miners from the existing powerhouses of Chinese miners, then Intel is going to have an uphill battle.

As stated before, there’s already been a lot of teams trying to take down the leaders of the bitcoin mining space, but going up against them is like going up against Goliath. They have the experience, networks, knowledge, and agility to navigate in this industry. First mover advantage is also a key factor.

Bitcoin Mining in Malaysia

How Malaysia may take China’s mining crown of Asia.

We’ve all seen it by now. Back earlier this year, a viral video showing a steamroller in Malaysia crushing and obliterating hundreds of ASICs was the talk on social media. Crypto Twitter became captivated by the tenacity of this act with many influencers and KOLs feeling the pain of someone daring to destroy the tools used to mine bitcoins. An act of treason some may say. We know for sure bitcoin miners across the globe felt the pain of seeing that.

The irony of it all is that crypto mining is not illegal in Malaysia. But the act of stealing electricity is. Those miners were purposely confiscated from miners that stole about $2 million worth of electricity from the official state grid company, Sarawak Energy. The confiscation was a joint raid amongst miners in the local city of Miri.

A total of over $1 million worth of ASICs were destroyed as the government didn’t want to sell them off on the second-hand market. Rather their moves made a loud statement that stolen electricity won’t be tolerated.

Eight have been arrested in connection with the mining operation in Miri, and six people have been charged under Section 379 in the Penal Code for stealing energy supplies, according to Hawari. Those charged will be jailed for eight months and face a fine of up to $1,900 per person.

The Cambridge Center for Alternative Finance estimates that Malaysia accounts for 3.44% of all the world’s bitcoin miners, placing it in the top ten mining destinations on the planet. (1)

The Cambridge Center for Alternative Finance estimates that Malaysia accounts for 3.44% of all the world’s bitcoin miners, placing it in the top ten mining destinations on the planet. (1)

Malaysia has unique geography where it is separated into two different unconnected parts, with both having their borders surrounded by water, specifically the South China Sea. Both parts share a largely similar landscape in that both Peninsular and East Malaysia feature coastal plains rising to hills and mountains. Peninsular Malaysia, which is the part of Malaysia with the highest population and includes cities such as Kuala Lumpur, contains a series of mountain ranges part of the Titiwangsa Mountains.

The mountain ranges are the origins of some of the country’s large river systems. East Malaysia, on the island of Borneo, has a coastline of 2,607 km and is divided between coastal regions, hills and valleys, and a mountainous interior.

“Malaysia has relatively abundant hydropower resources, albeit unevenly distributed among the different parts of the country, with heavier concentrations in Sabah and Sarawak. The first major hydropower dam, the Chenderoh Dam (27MW), was constructed in 1930. In the decades that followed, systematic development of the country’s natural resources has contributed over 27,300GWh of energy annually from an overall installed capacity of 6240MW. This represents about 17% of the total generation capacity (34,200MW) in the country, including gas, solar, coal and other power sources.

Malaysia has a total landmass of about 330,000km2 with a mean elevation of about 300m. The average rainfall is slightly more than 2600mm per year. In the mid-1970s an inventory survey of hydropower resources of the country was conducted and has since been used as indicative information of available hydropower resources within the country. Overall, the total gross hydropower potential documented is about 414,000GWh per year of which about 123,000GWh per year is the technical potential for development. About 87,000 GWh (70%) of this energy potential is located in Sarawak, 20,000 GWh in Sabah and 16,000 GWh in Peninsular Malaysia.

The development of major hydropower projects in Malaysia is generally undertaken by the utility companies such as Tenaga Nasional Berhad (TNB) in Peninsular Malaysia, Sarawak Energy Berhad (SEB) in Sarawak while in Sabah by the Sabah Electricity Sdn Bhd (SESB). There have been attempts by private players to participate in the development of major hydropower in Malaysia but with very little success to date. The development of smaller hydropower projects below 30MW is open to private parties and incentivized by the Feed-in Tariff (FiT) mechanism managed by the Government.” (3)

In October, Malaysian mall operator and developer, Hatten Land, announced their intent in working with Singapore Myanmar Investco in exploring business opportunities in cryptocurrency mining.

It should be a strange headline to see a mall developer come out and announce its plans to get into crypto. The past year has seen a swarm of non-related companies announce their interest in crypto and bitcoin. A couple of weeks after the SMI announcement, Hatten Land started working with Frontier Digital Asset Management in installing at least 1,000 crypto mining machines at properties owned or managed by Hatten Land in the Malaysian state of Malacca. The rigs will mine Bitcoin initially, with alternative coins to be considered in the future, it said.

“The Hatten Group has sufficient capacity to host the new green crypto mining operations in our malls without eliminating the retail aspect,” Executive Chairman and Managing Director Colin Tan said in an email Thursday. The “operations will improve the utilization and in turn enhance the profitability of our malls.”

Historically China has been the crowned leader for bitcoin mining in Asia, but ever since the harsh crackdown of bitcoin mining in China this year, Malaysia might be able to take that leadership crown within the Asian countries. Malaysia also has a vast crypto scene with some notable projects being from there such as CoinGecko.

And Malaysia is geographically situated in an advantageous location. With China in the north and Singapore on its southern border, mining financing is abundant with investors looking for yield in profitable locations such as Malaysia. Historically, Malaysia has always been a hotbed for investments due to its developing-developed country characteristics. It’s a mature country with strong regulations but also a vastly expanding country as well.

Compared to other countries and excluding China, Malaysia seems very well situated to be the mining leader in Asia.

What is Merge Mining?

The low-key tech of crypto, people outside of crypto don’t know about.

For those who have been in the mining business for a while, there are more than just specialized computers generating random numbers through SHA256 to win a lottery. If you would like a primer and refresher on what SHA256 is, please check out our previous blog on this topic here. A spawn of different types of mining methods and technologies have been born to accommodate miners that are seeking more…money! The more you mine, the more you increase your chances of block rewards. It’s simple.

The advent of different bitcoin forks has been a big factor as to why we have numerous mining technologies such as FIBRE, BetterHash, Stratum, Mining Derivatives, Hash Rate contracts, Cloud Mining, and much more. But it’s the growth of bitcoin merge mining that will be the focus of this blog topic.

In its simplest meaning, merge mining allows a miner to use their hashrates in mining multiple currencies that utilize the same mining algorithm. Merge mining, which is also called auxiliary proof of work, essentially allows a miner to have a chance in earning block rewards from separate networks. Merge mining requires having a primary coin and a secondary coin. The primary coin is the main network you are hashing on with the secondary coin being the additional network you are attempting to mine.

In the normal single coin mining, a miner is submitting a hash of a block header which is less than the public difficulty target number. This process is repeated over and over again until a miner finds a winning hash. In the context of merge mining, the primary coin’s block header hash includes a transaction, which contains a hash of the merged mined secondary coin’s block header.

Most mining pools support merged mining allowing smaller miners to merge mine, without them even knowing. The pool will just automatically include the secondary coin’s block header.

Into detail of how it all works

It all starts with a miner choosing a primary chain and a secondary chain. Let’s say if the miner chooses bitcoin as the primary chain and Litecoin as the secondary chain. The miner will then first start assembling blocks for both sets of chains, bitcoin and Litecoin. When the miner finished assembling a Litecoin block, the miner will hash the block and insert this particular hash into the assembled bitcoin block as a transaction. This transaction containing the Litecoin block hash is valid in the bitcoin block and doesn’t affect anything.

If the miner solves a bitcoin block correctly, they will get the reward from the block’s coinbase award and be able to finalize that block. The Litecoin hash and block will just be ignored. But if the hash also is an eligible hash for the Litecoin difficulty target, then the miner will also be awarded that Litecoin’s block. The miner will then need to include that bitcoin’s block header in Litecoin’s block header. Including the bitcoin’s block header, which includes the winning hash of the Litecoin block, is proof that work was done to submit a winning hash.

The amazing thing about this whole process is that Bitcoin nor Litecoin are affected. Maybe those blocks have a bit more data inserted into them, but besides that, both chains are running normally without the primary chain knowing about anything.

Merge mining itself has evolved over the past few years to take advantage of nuances and profit maximization opportunities. There are also slightly nuanced variations of merge mining. For example, there are regular merge mining and blind merge mining. Regular merge mining is conducted by Bitcoin miners, while blind merge mining can normally be conducted by anyone, who then pays Bitcoin miners in fees.

Other variations include Scrypt merge mining and blind merged mining with covenants.

In terms of economic incentives, miners will be incentivized to mine all blocks that are eligible for merge mining processes. In some way, these chains receive more miners and more hashrate competition, essentially helping network activity. Although some may market themselves as more secure because of the increase in hashrates, this is up to debate.

The mining space is complex and advanced as miners have developed more complex ways to efficiently mine coins. We hope this piece on merge mining is an educational piece for you to learn about different emerging technologies in the mining space.