Mining is critically important in crypto. It's the financial infrastructure of blockchains, especially Bitcoin. Global networks of distributed "trust machines" ensure decentralization and lay the plumbing for an open internet.
So how healthy is bitcoin mining in mid-2023?
The answer, according to a series of stories for CoinDesk's Mining Week, is healthy, mostly.
As George Kaloudis explains, Bitcoin's hashrate, a measure of the amount of computing power committed to running the network, is up five-fold in the last year. Meanwhile, many of the publicly-traded miners are showing impressive profits, driven by strong demand for bitcoin, higher asset prices and shrewder strategies to lower energy costs, hedge risks and find additional revenue, whether that's from demand response programs (like Texas's) or diversifying into AI.
Having said, the industry faces strong headwinds going forward.
The next halving, likely to occur next April, will halve the rewards available for mining single bitcoins. And then there's the whole question of the environment and its high energy needs. While the industry has made big strides to integrate itself to renewable power systems and use up excess energy (like natural gas that would normally flared), many critics simply can't accept that bitcoin mining is a legitimate use of electricity at a time of escalating climate change. Some states have worked to ban mining as a result, albeit not very successfully.
Going forward, the crypto mining industry will continue to be cyclical, buffeted by large uncontrollable forces, from the bitcoin price to energy costs. The industry will continue to play a key role in building a decentralized economy, but it won't be easy. The last decade shows that mining at scale isn't for the faint of heart.
