Bitcoin miners are likely to dump more coins come 2023. When one compares the miners’ income, the proportion of holdings, and profitability to prior years, according to quant, that is when the big issue about the miner capitulation occurs. Crypto tracker crypto quant estimates that in 2022, bitcoin miners earned $9.55 billion.
2/3 #Bitcoin miners made $9.55B in 2022.
What's the big deal about the #miner capitulation when miners make that much revenue?
Compare the miners' revenue, the share of holdings, and profitability to the previous years.
Details👇https://t.co/8grPPTBVjp pic.twitter.com/KcpGQXVFvi
— CryptoQuant.com (@cryptoquant_com) January 10, 2023
However, the deal’s miner capitulation clause is in doubt, given that they may earn up to $9.55 billion in a year. If this occurs, miners defend the Bitcoin network’s core by processing the proof-of-work, which costs money for their tools, electricity, labor, and other operating expenses. Although $9.55 billion in revenue looks like a lot, it is down 42.8% from $16.7 billion in the year prior. From 6.1% in 2021 to 1.5% in 2022, transaction fees’ share of overall income has dramatically decreased.
2023: Doom or victory for miners?
In 2023, the victors in bitcoin mining will be those with the most important debt positions. 2022 saw the asset’s third gloomy year since its introduction more than thirteen years earlier, with a 64% decline in value. The two most recent years with negative growth were 2015 (-58%) and 2019 (-71%).
Numerous Bitcoin miners have abandoned their operations during previous downturn cycles, a phenomenon known as miner capitulation.
Bitcoin was introduced following the Great Recession of 2008. Hence it has never gone through a severe recession. However, if a hard landing occurs in 2023, Bitcoin will fall further. After all, institutional investors continue to view it as a risk-on asset.
This entails debt restructuring or asset seizures for Bitcoin mining firms. In November, the faltering Stronghold had surrendered 26,200 rigs to the Bitcoin loan company NYDIG. The recession and increased energy prices might make Bitcoin mining even more problematic.
For instance, in March, the power cost for Argo Blockchain’s mining in Texas skyrocketed from $0.02 per kWh to $0.06 per kWh. Because of this, the business could not land a $27 million strategic investment in October. Will Foxley from Compass Mining recently predicted that Argo would fail.
The cryptocurrency mining sector will eventually consolidate once more. The only sources of relief in 2023 are a Fed reversal and decreased energy costs. The former may be in the cards if the Fed continues navigating unknown territory.
