Bitcoin Mining Battles 2023 – Rising Hash Rates Will Test Industry Limits

2023 has proven to be a testing year for the Bitcoin mining ecosystem, with high hash rates and pressure on miners to sell Bitcoin (BTC) to cover operational costs.

The annual Bitcoin mining sector review published by Compass Mining shows the highest growth in global hash rate by 2023. The network's hash rate started the year at 266 exahashes per second (EH/s) and more than doubled to 542 EH/s. In the year To close 2023, that represents an annual increase of 103%.

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The increase in hash speed is seen through the mining difficulty, a feature baked into the Bitcoin mining protocol to maintain an average block time of 10 minutes. As more miners increase global hash rates, Bitcoin's average difficulty started the year at 35T and ended at 72T on December 31st.

In the year In 2023, several miners increased their hash rate significantly. $IREN started the year at 1.7 EH/s and grew to 5.6 EH/s in six months, a 273% increase.

The company, with a working hash rate of 6.0 EH/s, has subsequently improved… pic.twitter.com/qL2fjY8xGA

— Anthony P⭕️month (@cazenove_uk) January 28, 2024

Hash rate battle

Bitcoin mining analyst Anthony Power explains how many miners have increased their hash rate until 2023 to see if the network has increased.

Iris Energy started the year at 1.7 EH/s and grew to 5.6 EH/s within six months, a 273 percent increase. Cointelegraph reported in December 2023 that Iris aims to double its hash rate to 11 EH/s by 2024, while Power said the expansion of its Childress site in Texas could reach 20 EH/s by the end of the year. More 9 EH/s miners.

Marathon Digital also saw a “significant increase in operational hash speed” by 253% from 7.0 EH/s to 24.7 EH/s in 2023. After purchasing two mining sites from Generate Capital in January 2024, Marathon aims to achieve 50 EH/s in the next two years, Power said.

Hail noted other significant annual hash rate increases in 2023 with CleanSpark (53%), Hut 8 (New Hut, 188%), Bitdeer (168%), TeraWulf (150%) and Bit Digital (101%). Meanwhile, Riot Platforms has increased its self-mining hash rate by 28% by 2023.

The largest Bitcoin producers

The report also says that Core Scientific will produce a total of 13,782 BTC in 2023, the most of any US-based miner, despite being in Chapter 11 bankruptcy for the entire year.

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Marathon Digital mined 12,843 BTC and CleanSpark was the third largest US miner with 7,391 BTC mined. Riot will produce 6,619 BTC by 2023, which is lower than analysts predicted before Powers revealed the impact of the company's energy strategy in Texas, he said.

The pressure of record hash rates has forced all mining operators to sell part of their monthly mined BTC to cover operational costs. As of December 31st, Hail Marathon and Hat 8 held 15,174 BTC and 9,195 BTC, respectively, managing to capture significant portions of their BTC reserves.

Texas-based bitcoin miners reduce costs

The report also provides a prime example of the ability of Bitcoin miners to adjust their consumption to meet the needs of the power grid.

As Power explained, Texas' abundant and affordable renewable energy has attracted major mining companies, which have followed Texas' ERCOT 4 Coincident Peaks (4CP) program, which encourages industries to reduce energy use during June, July, August and peak periods. September next year to save on transfer costs.

“In 2023, key Texas-based miners, including Argo Blockchain, BitDeer, Iris Energy and Riot Platforms, have strategically employed energy strategies to reduce costs.”

Hail added that these mining companies have reduced power at high risk by 10-15 times per month, preventing these miners from paying for reduced megawatts (MWh) (roughly $5 per hour) due to transmission cost recovery.

Riot Blockchain has secured a long-term power purchase agreement in Texas, adding 345MW of packaged power with an option to extend it until 2027 or 2030.

As a result, Riot received $71.6 million in total energy credits, which is equal to 2,480 BTC based on the average price of Bitcoin in 2023.

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