2020 is in the rearview mirror and what a year it was! A global pandemic, extraordinary monetary stimulus, and Bitcoin hitting multiple all-time highs were all on the agenda for what was certainly an eventful year.
Moving into 2021, Bitcoin continues to hit consecutive all-time highs. At HASHR8, we will do what we always do. Mining is the infrastructure that secures the Bitcoin network and HASHR8 dedicates our efforts to this critical industry.This year promises to be a banner year for Bitcoin miners and we are looking forward to every minute of it!
With countless companies eager to expand and grow their business activities in the mining industry, we will undoubtedly see monumental developments in the industry over the next year. We are thrilled to list HASHR8’s ten mining companies to watch in 2021! Presented by Compass, this list includes companies that are worth closely watching over the next year.
US Government – Several governments already have publicly-known Bitcoin mining operations. Venezuela and Iran both have Bitcoin mining activities. These countries may be looking at Bitcoin as a way to circumvent sanctions and meet import expenses. It seems to be only a matter of time before the leading first-world governments consider holding Bitcoin or mining BTC as part of a strategy to maintain power. It is highly likely that several governments have already begun investigating or implementing such activities. Will 2021 be the year that mining activity from the US government becomes publicly known? HASHR8 has recently received unconfirmed reports that the US government already has a small test site in operation. From a game theory perspective, it is logical for the US government to own Bitcoin or have infrastructure which is generating hashrate. If they fail to do so while their closest competitors acquire exposure and infrastructure, severe risks are imposed on their dominant position and national security. US Treasury Acting Comptroller of the Currency Brain Brooks has already voiced concerns over the significant amount of Bitcoin mining infrastructure residing in China. Brooks stressed that the US faces a “geo-strategic competitiveness issue”. Garrick Hileman – Head of Research at Blockchain.com – anticipates that we may see major governments publicly owning Bitcoin in 2021. The rush for the US to control infrastructure surrounding Bitcoin is evident in a recent announcement from the US Office of the Comptroller of the Currency (OCC). The OCC has authorized banks to treat public blockchains as a settlement network and to run nodes. The note by the OCC anticipates that demand to transact across public blockchain networks will continue to rise. The OCC clearly views US banks operating the infrastructure required to send and receive Bitcoin transactions as a critical response to this rise in demand.
CoinMetrics – CoinMetrics have produced exemplary research in 2020. Karim Helmy’s nonce distribution analysis is a piece to remember. The analysis estimated the prevalence of Antminer S9s on the Bitcoin network at a time when claims of upcoming S9 obsolescence were widespread. They have not only published studies that are insightful alone but they have released work which elucidates confusions in other work. Another piece by Karim analyzes the flows of Bitcoins funds from addresses that received a coinbase transaction (0-hop) and addresses that received funds from the addresses which received coinbase transactions (1-hop). Many previous studies have attempted to discern miner behaviour by analyzing 0-hop addresses. However, 0-hop addresses are often mining pools which need to payout to their connected miners. Karim’s work on 0-hop and 1-hop is the first which attempts to partition the behaviour of mining pools and connected miners. In addition to research work, CoinMetrics released a hashrate index to help the development of hashrate and difficulty futures products. If 2020 is any indication of 2021, we can expect more Bitcoin mining research and tools from CoinMetrics over the following year.
Galaxy Digital – As the institutional interest in Bitcoin mining rises, especially in North America, Galaxy Digital has launched a mining arm to help companies navigate the market. The hiring of Amanda Fabiano (former Director of Bitcoin Mining at Fidelity) as Head of Bitcoin Mining, publicly signaled Galaxy Digital's intent to become a serious player in the mining industry. Fabiano is leveraging Galaxy's $400+ million balance sheet to provide Miner-financing services (MiFi) and invest in worthy products for the ecosystem.
Foundry – Digital Currency Group has also taken an interest in the mining industry, launching Foundry in 2020. Foundry provides both advisory and financing services to mining companies. With an initial $100 million backing from Digital Currency Group, Foundry will have the resources to carve a significant share in the market of financial and advisory services for Bitcoin miners. We anticipate that financing will become even more important in the coming years as competition further intensifies. The ability to upgrade mining machines or secure loans may be the deciding factor that determines whether a firm sustains operations or becomes the prey of a larger firm’s buyout. The gauntlet has been thrown down and we expect the competition between Galaxy Digital and DCG/ Foundry to positively impact North American miners. When companies compete, consumers win!
Braiins – Braiins have had a big year! Stratum v2 received mainstream attention. If implemented, the proposed protocol has significant security benefits such as allowing miners to choose their own transactions to be included in each block. This takes the discretionary power away from mining pools and lowers hashrate concentration risk. Braiins have also released firmware with support for the Antminer S17 and S9 series. Their website notes that support for the Whatsminer M20S and the Antminer S19 series are in the pipeline. Braiins also added an insights section to their website where you can visualize the cost to mine one Bitcoin at varying electricity prices. With 2020 packed full of product releases, we expect the trend to continue in 2021.
Upstream Data - Utilizing energy which would otherwise be stranded for mining Bitcoin is a topic which has received increased attention in 2020. Upstream Data – led by Steve Barbour – are experts in this space and have been working on solutions for oil and gas producers since 2018. Upstream Data offers portable Bitcoin mining facilities which allow oil and gas producers to mine Bitcoin with the methane that would otherwise be vented or flared. There has been significant progress in these services over the past two years but there is still plenty of room for further innovation and adoption. In the short lifespan of these services, Upstream Data are veterans, and we foresee the company as the most likely to further innovate.
Bitfarms – Venturing afield is a risky proposition. It poses the possibility of lost capital, time, and energy. But those that do venture afield and take risk put themselves in a position to benefit from discoveries that their competitors have yet to unveil. For miners, lowering input costs is the holy grail of innovation. With electricity estimated to account for 79% of a miner’s operational expenditure (OpEx), lowering electricity costs is a priority. Bitcoin mining in South America remains largely unexplored by exchange-listed miners. In October, Bitfarms announced that it signed a memorandum of understanding with a private energy producer in South America to secure up to 200 MW of energy at $0.02 per kWh. The location of the power producer is unknown. It will be interesting to see how this potential partnership plays out in 2021 and whether we may observe more exchange-listed miners negotiating power contracts with producers in South America.
Riot Blockchain – Riot Blockchain is another exchange-listed mining firm which is exploring ways to lower their input costs. Riot wrapped up the year by announcing a partnership with Enigma and Lancium to investigate immersion technology. Immersion technology involves operating mining machines within liquid to enable overclocking. The liquid immersion improves heat resilience which allows miners to overclock their rigs with a reduced risk of the machine overheating. Riot will initially be testing the technology on a 8 MW pilot project. If the firm can successfully secure lower input costs and implement the technology at scale, they will secure a competitive advantage over other exchange-listed miners. In this case, it would spur other companies to seek ways to lower their costs.
Bitmain – After an extremely turbulent year, Bitmain will be entering 2021 with a new corporate structure. The business will split with Micree maintaining control of the manufacturing business, the AI business, Antpool, and domestic mining firms. Jihan will take control of BitDeer, BTC.com, Matrixport, and overseas mining facilities. Micree is firmly in the driving seat and with the backing of Sequoia Capital, it is believed that a Bitmain IPO will take place in 2021. Conditions are ripe for an IPO. The recent bullish price movements of Bitcoin combined with correlated rising prices in the hardware market certainly make it an enticing time for the leading Bitcoin ASIC manufacturer to list. A Bitmain IPO would not only be the biggest IPO in cryptocurrency history but may be one of the biggest IPOs of 2021.
MicroBT – Bitmain and MicroBT have been neck-in-neck in terms of innovation. The most efficient Bitcoin mining machines available come from these firms. There has been some speculation of a next-generation rig release from MicroBT but there has been no confirmation. Over the past year, MicroBT has been positioned to capitalize on Bitmain’s troubles. They have captured market share from the leading ASIC manufacturer and competition is certainly intense between the two moving into 2021. MicroBT has been constantly sold out of inventory in the latter end of 2020 as Whatsminer rigs became the go-to choice for several large scale miners. With Bitmain settling into a new structure for 2021, the competition will continue to intensify over the next year. MicroBT will undoubtedly be working relentlessly to stay on the frontier of innovation and we see some exciting releases from the second-biggest hardware manufacturer.
Did we miss anyone? Tweet us @H4SHR8 to share who you would add to the list.
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