In an intriguing trend that somewhat contradicts the ethos of decentralisation central to blockchain technology, wealth management company Berstein suggests that the biggest players in digital asset mining stand to make the most gains. Based on their report from August 3, massive miners having invested plentifully in capacity and equipment are on track to reap impressive profits, especially with Bitcoin (BTC) rates hovering around the $30,000 mark.
These predictions take into account the recent capacity surge among the leading 16 publicly listed mining companies. Their enlarged capacities account for a significant 16% of total mined BTC, reflecting burgeoning growth within the industry. With predictions of growth exceeding 182%, these companies are readying themselves for a brisk upscaling phase, leveraging their total mining strength of 72 exahashes per second (EH/s).
This increased capacity could furnish an easier pathway for these businesses to replenish losses experienced during the chaotic events of 2022. Notably, larger miners with lower production costs and minimal debt should see the maximum benefits of these capacity additions, given their increased resilience to Bitcoin’s price volatility and cost spikes prompted by Bitcoin halving, anticipated in early 2024.
These industry giants can largely sidestep the impact of volatile crypto prices stirred up by macroeconomic dynamics thanks to their superior debt-equity ratio. Owing to the colossal scale of their operations, these firms also stack BTC on their balance sheets, providing a critical advantage that allows them to await higher rates before trading their assets or transferring to exchanges.
The flip side to this story is the potential implications for smaller players. While these top-level miners seem predestined for a long-term winning streak, with Bitcoin production costs below $15,000, greatly favorable compared to the currency’s current rates, smaller-scale miners could find themselves in a tougher position. Bearish market outlooks often result in smaller miners selling off their crypto holdings just to break even or, in some cases, being forced out of business entirely.
While a Bitcoin price surge, such as the one experienced this year with rates circling $30,000, provides welcome relief for the entire mining sector, the upcoming halving predicted to double production costs could shift the scales. As echoed by JP Morgan, this could foster gradual industry consolidation, essentially leaving only the larger, low-cost players on the field.
Source: Cryptonews
