The mass exodus from China helped decentralize the mining hash rate, and new business opportunities emerged thanks to leading companies. Although many regulators argued that the activity damages the environment, miners looked for more efficient energy consumption.
In the year that recently ended, Bitcoin mining businesses and companies thrived like never before. Exchange-traded funds (ETFs) emerged, seeking new business opportunities and forming alliances with leading companies.
Many mining farms overcame environmental criticism, demonstrating efficiency in energy consumption with the help of the oil and electricity sector.
There was a geographical decentralization of the hash rate due to the mass departure of Chinese miners to other territories. In that period, the Bitcoin network had its greatest pullback in 10 years but was resilient and overcame it.
Despite the microprocessor and supply chain crisis, the buying and selling of Bitcoin mining equipment increased. Many people even started mining from home, which had not happened since the first years of the cryptocurrency.
The hash rate and the difficulty level of the network reached all-time highs on several occasions. Throughout the year, there were few periods of congestion and high fees.
Miners also participated in crucial voting and consensus processes, implementing updates like Taproot.
How Bitcoin Mining Closed the Year
Over the last week, the hash rate and the difficulty level reached a new all-time high. However, the network has become congested, while transaction fees have increased.
Fees now range from 11 to 14 satoshis per byte of information, equivalent to between 70 and 80 US cents, according to Mempool.Space. Of course, the cost to pay will depend on how significant a transaction is.
The most recent mining difficulty adjustment occurred on December 25th, hitting 24 T. That has been one of the highest rates in the history of Bitcoin, according to Glassnode.
Data from BTC.com indicates that it occurred when the hash rate of Bitcoin miners was at 173 exahashes per second (EH/s). That has been the highest in the history of Bitcoin.
Despite mild transaction congestion, the total fees collected by miners dropped during 2021. The increased user base of the Lightning network now allows transferring small and large amounts between peers at low costs.
Miners may be accumulating significant amounts of Bitcoin as users are trading more on Lightning than on the mainnet. This week, the former had at least 1.2 million BTC in their savings, close to the all-time high of 1.77 million BTC in 2020.
Bitcoin Mining Grows but Environmental Threat Reduces
Many regulators argued that Bitcoin mining generated high energy consumption and harmed the environment. Although miners overcame that debate, there were always those who supported that criticism.
In their search for new destinations, Bitcoin miners adapted to local circumstances. In that way, they made their energy consumption more efficient regarding environmental impact.
For example, the Texan oil and gas industry opened its doors to Bitcoin mining. They allowed miners to use their surplus production to conduct their operations.
Bitcoin miners could access cheap energy to make their activity more thriving. Besides, the oil industry could get rid of surplus natural gas, which they did not know how to use profitably.
While senators like Ted Cruz acknowledge the benefits of the activity, others like Elizabeth Warren criticize it for its positive carbon footprint. Despite that, specialists like Nic Carter and Lyn Alden agree that Bitcoin does not have a significant environmental impact.
By Alexander Salazar
