The mining data site Hashrate Index has published a report reflecting the state of the Bitcoin mining industry throughout 2022.

The analysis examines the sharp drop in mining profitability in 2022 compared to 2021 amid falling Bitcoin prices and a rising hash rate.

The hardest-hit bear market

for him report Posted on Wednesday, the Bitcoin hash price reached an all-time low of $55.94/PH/day in November last year. Hashprice is a dollar-denominated measure of miners’ revenue for each unit of hash power used.

The 2022 annual average hash price was $123.88/PH/day, a sharp drop from the average of $314.61/PH/day in 2021. The sharp drop was largely driven by the start of the Bitcoin bear market, but also by an average 16% increase in energy costs across the United States in 2022.

“35 states have average industrial electricity rates lower than the current S19 Pro breakeven electricity price of $92 per MWh,” the report explains.

Rising energy costs also caused the cost of hosting services to skyrocket. While a “reasonable contract” may have offered prices of $0.05-$0.06/kWh before 2022, it is now “not uncommon” to see rates around $0.08-0.09/kWh. “Anything below $0.075/kWh is considered theft given market conditions,” the report continued.

Meanwhile, trading in ASICs, the specialized machines used to efficiently mine Bitcoin, has plummeted. PCs across all new, mid, and old generations saw their performance drop by more than 80%, causing the premium for the S19 XP to rise throughout the year.

Public miners suffer

Public Bitcoin miners have suffered heavy losses in this environment, with most pure Bitcoin mining stocks plunging more than 90% by 2022. One of the world’s largest miners, Core Scientific (CORZ), fell 99%. % as worrying rumors about the company’s solvency mounted. , culminating in an official bankruptcy filing towards the end of the year.

The second-worst-performing mining stock was Greenidge Generation (GREE), which fell 98% as it struggled to pay off high-interest debt collateralized with its own ASIC machines.

Other miners like Iris Energy also suffered under the weight of such loans, and Iris was forced to slash its mining capacity to pay its debt to NYDIG in November.

Public miners were incentivized to expand as quickly as possible during the 2021 bull market, causing them to further expand their hashrate dominance from 14% to 19% over private miners.

In 2022, the overall Bitcoin hashrate increased another 41%. This was also largely driven by public miners, who increased their cumulative hash rate by 59% versus a 19% increase among their private counterparts.

Finally, 2022 marked a year in which Bitcoin mining became “the only proof-of-work game in town.” Its only major rival, Ethereum, changed its consensus mechanism to proof-of-stake in mid-September, thus killing the Ethereum mining industry with an upgrade.

Despite Ethereum’s three and a half months without proof of work, miners on the network still produced almost as much revenue as Bitcoin miners last year ($8.87 billion vs. $9.55 billion). Today, Ethereum miners have been replaced by stake validators, who produce new ETH at a price much slower rate than the miners before the merger.

“Bookmaker revenue is a shadow of mining revenue,” the report states.

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