#120 - Crypto miners were down bad in 2022

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Today,

• Mining was 37% less profitable in 2022

• SBF pleads not guilty for October trial

Top 24 hr NFT collection volume

via CoinMarketCap

1. CryptoPunks - 6 sales earning 404.49 ETH (0.10%)

2. BAYC - 5 sales earning 400.64 ETH (0.08%)

3. BAKC - 41 sales earning 395.65 ETH (0.77%)

4. The Potatoz - 122 sales earning 365.03 ETH (0.13%)

5. MAYC - 16 sales earning 291.35 ETH (0.07%)

Miners made 37.5% less in 2022

If you thought you had a tough year in web3, spare a thought for the crypto miners.

They got hit from all angles over the past 12 months, taking their overall revenue from around $15 billion in 2021 – to just $9.55 billion in 2022.

Here's a list of everything that happened to the mining industry in '22.

The Merge happened

Ethereum's "merge" saw the world's largest blockchain move from a mining-based verification mechanism to a user-staking model.

That rendered mining for Ethereum obsolete – taking around $5 billion of mining hardware offline in the process.

Mining difficulty rose

In 2022, Bitcoin mining difficulty reached a record high due to rising hash rates, meaning mining rigs required more energy to function.

Hash rate represents the difficulty of the computation required to secure blocks on the chain and generate compensation for miners.

• BTC hash rate difficulty increased by 9.3% in Jan and 13.5% (ATH) in Oct

Then energy prices soared

Just as miners' energy requirements increased, Russia's invasion of Ukraine and the wider cost-of-living crisis caused energy costs to spike. 🤦‍♀️

$BTC plummeted

Partly thanks to macro conditions, partly thanks to the collapse of funds like 3 Arrows Capital, and partly due to failed exchanges with shady altcoins like FTX and Luna, Bitcoin value nosedived over 2022.

• BTC started the year trading around $46,000 but hit a low of $15,599 in November

• Its market cap dropped from $874.9 B in January '22 to $318.38 B this Sunday

Mining operations tanked and CEOs resigned

The CEOs and/or co-founders of Greenidge Generation, Compute North, Compass Mining, and Bitfarms resigned, while 6 companies were hit with big lawsuits.

2022 left the largest mining operations sinking in debt. For example, Marathon is thought to have over $800 million in debt with high exposure to bankrupt firms, like $80 million of assets tied up with now-failed Compute North.

– ah yes, the bankruptcies.

• Compute North filed for bankruptcy in September with $500 million in debt and 200 creditors

• Core Scientific, the largest public mining company, filed a few days before Christmas. They've got $1.3 billion in debt 😱

• The mining divisions of lenders Celcius and BlockFi both vanished when those companies went insolvent

So – Is this the end for miners?

As long as Bitcoin remains an active proof-of-work chain, there'll be miners.

In fact, last year's record hash rate shows that interest in mining continues to grow, despite 2022's revenue hits.

Maybe we're seeing one of those forged-by-fire situations – where only the most efficient, market-savvy operations are left standing?

Tweet of the day

On the web3 wire

• NFT founder and streamer DNP3 spent investor funds on gambling addiction 🎰 

• Binance retains 2/3rds market share amongst exchanges

• 6-month-old The Potatoz NFTs surge on OpenSea 🥔

SBF trial set for October

In a move that surprised nobody, Sam Bankman-Fried pleaded not guilty to all 8 charges in yesterday's court hearing for the FTX fraud case.

Seems like SBF is sticking to the same likely story he told as many times as possible during his whirlwind MSM interview tour.

His version of the FTX collapse basically boils down to: "I was soo busy working hard and being a genius that I got tired and made some big oopsies & I'm really really sorry." 🥺

What you need to know:

• SBF is charged with two counts of wire fraud and six counts of conspiracy

• The charges carry a potential sentence of 115 years

• He's being defended by Ghislaine Maxwell's attorney, Mark Cohen

• Unlike SBF, Alameda CEO Caroline Ellison and co-founder Gary Wang pleaded guilty

• SBF is currently at his parents' place under house arrest on a $250m bond

In yesterday's hearing, the judge also ruled that SBF can no longer access or transfer any FTX or Alameda-related funds. Finally.

So, when's the trial?

A not-guilty verdict means we get a trial, and Southern District of Manhattan Judge Kaplan has set a target for the fall.

There is a good chance that SBF will still negotiate a plea after seeing more of the evidence against him, but the date currently circulating is October 2nd.

If it goes ahead, experts expect the trial to last at least a few weeks.

Can we watch?

Because SBF is charged by a federal court, it's unlikely we'll get to watch him squirm live on TV. Boo. 😭

But, expect every news team in the country to be waiting outside as prosecutors lay out their arguments for how SBF broke federal laws by scamming his customers, investors, and lenders.

Popcorn and beverages at the ready for when they bring up the orgies, Adderall, League of Legends addiction, and clandestine software backdoors.  

C U guys tmrw

👋

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