Global cryptocurrency mining market is estimated to witness high growth, owing to increasing adoption of cryptocurrency and growing popularity of decentralized finance
Global Cryptocurrency Mining Market is estimated to be valued at US$ 2.24 Bn in 2024, exhibiting a CAGR of 8.7% over the forecast period 2024-2031. Expanding acceptance of digital currencies and growing popularity of decentralized finance (DeFi) can drive the cryptocurrency mining market growth. Furthermore, increasing investments from venture capital firms can also drive the market growth.
Market Dynamics:
Increasing adoption of cryptocurrencies: Cryptocurrencies like Bitcoin and Ethereum have gained wider acceptance as a medium of exchange over the past few years. Many retailers and online merchants have started accepting cryptocurrencies as payments. This growing adoption of cryptocurrencies has boosted demand for cryptocurrency mining.
Growing popularity of decentralized finance: Decentralized finance (DeFi) enables financial services without central authorities. The total value locked in DeFi protocols has grown exponentially in recent times. As DeFi applications are powered by blockchain networks, their rising usage can boost mining of associated cryptocurrencies like Ethereum to validate transactions on these networks.
Increasing demand and acceptance of cryptocurrencies globally
Rising popularity of cryptocurrencies like Bitcoin and Ethereum has boosted demand for these digital assets globally. More people are accepting cryptocurrencies as a viable payment and investment option. As the value and circulation of popular coins increase, more mining power is required to validate transactions and release new coins into circulation as rewards. This growing usage and acceptance of cryptocurrencies as a legitimate financial technology can drive the cryptocurrency mining market growth.
Advancements in ASIC chip technology have improved hash rates and mining efficiencies
Application-Specific Integrated Circuit or ASIC chip manufacturers are continuously enhancing their chip designs to deliver much higher hash rates than commodity GPU or CPU chips used in the early days of cryptocurrency mining. The latest Bitcoin ASICs can achieve hash rates in the terahashes per second (TH/s) range. For alternative coins like Ethereum, the most advanced ASIC and FPGA mining rigs offer gigahashes per second (GH/s) capabilities. This improved mining efficiency through specialized chips has decreased the costs for miners and made cryptocurrency production more profitable even at lower coin prices. The latest innovations in ASIC technology encourages more investments in large-scale mining farms.
Declining cryptocurrency values and market volatility
Fluctuating value and high volatility of popular digital coins can hamper the market growth. After the price crash of 2018, the values of Bitcoin, Ethereum, and other coins have remained significantly lower than their all-time highs. For miners, lower cryptocurrency prices mean reduced profits from block rewards and transaction fees. High volatility also makes long-term business planning difficult. Any further extended downtrend in coin values can impact mining operations, potentially leading to facility closures and reduced expansion plans until prices recover. Market uncertainty hinders wider institutional adoption of cryptocurrency mining as an industry.
Regulations on electricity usage and environmental impact increase operational costs
As the proliferation of large-scale, heavily computerized mining farms places higher demands on energy resources, governments in some regions have introduced new regulations surrounding electricity usage for cryptocurrency mining. For example, some municipalities now charge industrial power tariffs for mining operations, thus, leading to higher electricity costs. Regulations are being proposed or enacted in multiple jurisdictions to curtail the carbon footprint of mining farms and promote more sustainable practices. Complying with such environmental standards increases costs and complexity for miners. Appropriate regulation, if not implemented carefully, may discourage further growth of mining operations.
Emergence of alternative coins provides opportunities for diversification
With over 2,000 cryptocurrencies available today, miners does not necessarily need to rely solely on mineable coins like Bitcoin or Ethereum. Newly launched coins utilizing various consensus mechanisms like Proof of Stake can still require an initial distribution phase where mining rewards are paid. This diversification into newer, profitable opportunities like these emerging coins provides miners a hedge against risks from dramatic price movements of top currencies. Coin candidates backed by strong use cases and developer communities offer opportunities to expand mining operations beyond just a few top coins.
Hosting services and co-location models can reduce barriers to entry
Specialized hosting providers now offer co-location services where individuals or small groups can rent dedicated mining rig space and infrastructure at industrial scale farms. This lowers the barriers for smaller participants lacking facilities, resources and technical skills required to set up their own farms. Hosting services handle ongoing maintenance, connectivity and scaling requirements for clients. Such accessibility models have enabled wider distribution of mining power beyond large industrial operations alone. As costs reduce further, co-location and hosting can democratize the mining ecosystem by onboarding a new wave of retail-level miners.
Link - https://www.coherentmarketinsights.com/market-insight/cryptocurrency-mining-market-1099
Key Developments:
- In January 2022, Hut 8 Mining Corp., a digital asset miner, announced the acquisition of TeraGo Inc.'s data center business, thus, establishing Hut 8 as a leading high-performance computing platform with five geo-diverse facilities across Canada offering cloud services and 4.1 MW of existing capacity, further, diversifying its operations and customer base beyond crypto mining
- In January 2022, Hut 8 Mining Corp., one of North America's largest digital asset miners, announced the acquisition of TeraGo Inc.'s data center business. This transaction established Hut 8 as a leading high-performance computing platform, with five geo-diverse facilities across Canada offering cloud services and 4.1 MW of existing capacity. The acquisition further diversified Hut 8's operations and customer base beyond crypto mining.
- In June 2021, NCR Corporation, a leading provider of banking and payment technologies, announced a partnership with NYDIG, a digital asset management firm. This partnership enables over 650 banks and credit unions across the U.S. to offer cryptocurrency buying and trading services to their customers. The initiative allows NCR's banking clients to meet growing consumer demand for digital asset investment options directly through their existing banking platforms.
Key Players:
Argo Blockchain, ASICminer Company, Bit Digital, Inc., BITMAIN Technologies Holding Company, Braiins Systems s.r.o., Canaan Inc., Core Scientific, F2Pool, Genesis Mining Ltd., HIVE Blockchain Technologies Ltd., Hut 8 Mining Corp., iMining Technologies Inc., MinerGate, Miningstore, Riot Blockchain, Inc.
