It’s hard to build in winter, but we’ll always need infrastructure to get where we need to go.
Let’s talk about CRYPTO WINTER
This phrase, coined circa 2018 when crypto markets took their first substantial dip, is naturally inciting fear in those invested in the market, which was worth 2.3 Trillion1 in Q4 2021 according to Bloomberg.
The fact remains, however, that until recently this previously exploding market was expanding at a steady CAGR of 7.1%, resulting in the fast-growing creation of infrastructures that rely on the existence of crypto mining.2
To quote the iconic series Game of Thrones that inspired this fear-mongering term, “Winter Is Coming”.
Just like the highways, bridges and tunnels that we use daily to get to work, the continued expansion of infrastructures dependent on crypto mining are equally, if not more important, than ever before.
It’s unequivocal, crypto markets are currently suffering along with the rest of the economy, however the necessity of mining Crypto based coins in this space has not lost its validity.
Cryptocurrency has made its mark as an integral part of our global financial system. In fact, a growing number of companies worldwide are using these digital assets for a host of investment, operational, and transactional purposes.
A recent study showed that up to 40% of customers paying with crypto are not only new users, but that their purchase amounts are twice those of credit card users.3
Data like this has shifted the mindset of many companies, who have made the move to create systems that cater to new demographic groups. As a result, the intrinsic value of crypto mining based infrastructures continues to rise.
The introduction of Cryptocurrencies has tokenized traditional investments and introduced new asset classes with access to new capital and liquidity pools.Th is programmable, decentralized, and trackable currency enables real-time, accurate revenue sharing with increased transparency – through the use of blockchain technology.
Cryptocurrency’s value to businesses is rooted in its relationship with blockchain, which tracks each crypto transaction through peer-to-peer (P2P) networks. As the integration of crypto becomes more prevalent in commercial transactions, the need for mining and infrastructure maintenance has increased – regardless of the current value of any given coin.
In short, this “Crypto Winter” – or downswing in the crypto markets, does not detract from the validity of the currency’s continued mining any more than it affects any other security.
Dedicated miners know this.
In fact, the total hashrate – the standard measure of computational ability per second when mining – of the bitcoin network continues to hit all-time highs.4
The latest data from the Cambridge Centre for Alternative Finance (CCAF) shows that it reached 248 exahashes per second in February, while more recent data indicates that it has continued rising in the intervening months.5
While the prospect of building this metaphorical highway in winter is daunting, the act of crypto mining isn’t going anywhere.
What about the environmental factor?
Even amidst President Bidens recent executive order regarding Bitcoin Mining, Louis Clerous, CEO of Canadian crypto platform Timechain has countered, stating that “using wasted energy with miners should be something to consider”.
In fact, industry experts suggest that mining could actually reduce greenhouse gas emissions by consuming methane that would otherwise be leaked into the atmosphere.
Clerous continued that “Selling excess energy to miners is the best for both parties. Also, in a Proof-of-Work ecosystem, the winning miners are the ones who are able to be competitive in terms of hashrate/energy cost. This competitive system promotes healthy competition between miners to push for more efficient mining activities.”
ConocoPhilips, an industry-leading oil and gas giant, announced this year that they are selling extra flare gas to Bitcoin miners. Essentially, the company will reduce routine flaring by allocating gas that would otherwise be burned off, making bitcoin a load balancer for energy waste.
Experts say that the cryptocurrency market is more susceptible than any other to influence, being it is such a new asset class. Anything from a celebrity tweeting about a given crypto to new government regulations that impact it as an investment class, create volatile moves within the market due to the effect of what is known commonly in the industry as Human Emotion.
Success rates for new traders are notably higher when using trading alerts, based in AI, that have the capability to remove the emotion while trading crypto.