The year 2022 has been a challenging one for the cryptocurrency market, particularly for Bitcoin. The recent fluctuations in Bitcoin’s price indicate that bears are still exerting pressure on the market. This has resulted in diminishing profits for Bitcoin miners. Additionally, United States lawmakers have requested energy consumption data from major Bitcoin mining companies, further adding to the challenges faced by the industry.
Despite the bearish climate, many Bitcoin miners remain optimistic about the short and long-term prospects of Bitcoin’s price. Canaan’s senior vice president, Edward Lu, shares this optimism and discusses the developments in the mining industry in an interview with Cointelegraph.
Lu highlights the significant changes that have occurred in the mining industry in recent months. Previously, China and the U.S. were the major markets for mining, but Chinese miners have since relocated to Kazakhstan, and there has been a shift towards the U.S. market. Lu attributes this shift to factors such as the availability of cheaper electricity, friendly policies, and the presence of skilled engineers in the U.S., particularly in Texas.
The interviewer raises concerns about the rising electricity prices and the cost-effectiveness of mining in the current climate. Lu acknowledges that short-term drops in Bitcoin’s price and increasing energy costs may impact profitability. However, he believes that in the long run, the mining industry remains healthy and profitable. He explains that the profitability of mining depends on various factors such as machine cost, energy cost, infrastructure cost, and daily maintenance expenses. Based on these factors, Lu suggests that Bitcoin’s price should not drop below $15,000 for miners to continue making a profit.
The interviewer also discusses the upcoming Bitcoin halving and its impact on the efficiency of ASICs (Application-Specific Integrated Circuits) used in mining. Lu explains that while the rewards for mining decrease with each halving, the efficiency of ASICs continues to improve. He emphasizes that the profitability of mining depends on multiple factors, including machine costs, infrastructure costs, energy costs, and Bitcoin’s price. Lu believes that the mining industry will continue to grow and remain profitable.
The conversation then shifts to the growing synergy between traditional energy companies and Bitcoin mining. Lu explains that energy companies are increasingly involved in Bitcoin mining to utilize wasted and surplus energy. This involvement helps them convert these wasted energies into a storable value, contributing to the long-term sustainability of the industry. Lu believes that this increased involvement of energy companies, along with the changing profile of players in the mining industry, brings professionalism, transparency, and long-term goals to the industry.
The interviewer raises concerns about the industrialization of mining and its potential impact on Bitcoin’s decentralized nature. Lu reassures that Canaan remains committed to decentralization and focuses on producing machines that can be used by individual miners at home. He emphasizes that Canaan’s machines are designed to consume less power and maintain decentralization in the mining process.
In conclusion, Lu expresses his confidence in the future of Bitcoin and the mining industry. He believes that the industry has evolved in terms of technology, infrastructure, and the involvement of institutional players. He sees the current challenges as opportunities for miners, manufacturers, builders, and investors. Lu shares a Chinese proverb that sees crisis as both danger and opportunity, and he believes that the current situation presents more opportunities than crises.