According to CryptoSlate data, the price of Bitcoin (BTC) has dropped by 64.68% to $16,870 from roughly $47,766 at the start of the year. At the same time, according to Compass Mining, share values of Bitcoin mining businesses plunged by 91% on average from their 52-week highs.
According to a Compass Mining analysis, this hasn’t stopped mining companies from expanding their Bitcoin mining capacity beyond 2022. According to the Compass Mining report, CleanSpark increased its BTC mining hash rate from 1.9 EH/s at the beginning of 2022 to 6.0 EH/s, or around 62,000 miners, to date—an increase of 189%.
Riot Blockchain and Bit Digital increased their hash rates by 157% and 148%, respectively. Furthermore, Bitfarms, Digihost, and Marathon Digital Holdings each upped their mining hash rate by 100%, according to the research.
Higher mining capacity will undoubtedly result in increased Bitcoin output during 2022. Riot Blockchain, for example, mined 4,872 BTC as of November 2022, compared to 3,812 BTC and 1,033 BTC mined in 2021 and 2020, respectively.
According to the data, CleanSpark has mined 4,157 BTC so far this year, compared to 1,528 BTC mined in 2021. On December 21, Bitfarms reported that it had mined its 5000th BTC in 2022, breaking its previous record of 3,452 BTC mined in 2021.
Miners acquired Bitcoin in an optimistic mood, then sold it during a liquidity crisis.
Despite Bitcoin falling considerably below its all-time high of $69,000 reached in November 2022, miners were remained bullish on the market in early 2022, according to the Compass Mining report. As a result, many miners used their financial reserves to buy BTC in addition to mining them.
Bitfarms reported the purchase of 1,000 BTC for $43.2 million in the first week of January 2022, increasing its BTC holdings by 30%. Argo Blockchain purchased 172.5 BTC during the second half of January.
Bitfarms sold 7,309 BTC in 2022, including the 1,000 BTC purchased in January, whereas Argo Blockchain sold the majority of their BTC at far lower rates. Both companies borrowed huge sums to fuel growth, with Bitfarms entering into a $32 million mining equipment financing agreement with BlockFi and Argo Blockchain releasing terms of massive loans from New York Digital Investment Group.
With the bear cycle in full swing, most miners were experiencing liquidity concerns. Core Scientific took the most severe blow, filing for Chapter 11 bankruptcy on December 21. Greenidge is also restructuring to avoid bankruptcy, and Argo Blockchain was delisted from the LSE due to insolvency fears.