Up until May, China had been responsible for half of the entire global Bitcoin hash rate. Following the PRC's expulsion of miners, the network's capacities fell by 50%. After that, the lower mining difficulty and increased reward from one terahash led to an explosion of demand in the ASICs market.

This total redistribution saw China lose all of its share of the mining market as the US took the top spot (34%), with Kazakhstan (13.8%) and Russia (11.9%) moving into second and third place, respectively. The bulk of second-hand Chinese gear made its way to neighbouring countries, while US-based companies put in scores of new equipment orders using funds from IPOs and loan capital. This arms race helped bring about the full recovery of Bitcoin's computational capacities over the course of the last seven months. 

On the one hand, attracting external capital reduces one's own financial risk. On the other, however, it requires companies to constantly increase their computational capacities in order to remain attractive to investors. Thus, on 23 December, Marathon Digital announced a record order for a farm of the latest s19 XP ASICs from Bitmain. Their aim is to increase their current hash rate by 600% to 23 EH/s by the start of 2023 to become the biggest publicly traded mining firm in the world. This news saw the companies shares rise by 12% in the space of just one day.

In order to finance its order, a record-setter in terms of the amount, Marathon Digital took out a $100 million loan from Silvergate Bank in October. The company has already purchased 35,419 ASICs this year, while the total amount is expected to rise to 199,000 by early 2023.

Despite the correction over the last two months, Bitcoin still looks like an attractive investment. Meanwhile, the increase in computational capacities will not lead to a supply surplus since mining difficulty is also on the rise.

Analytics agency Glassnode notes that, of late, about 100,000 BTC per month is being sent to cold wallets and low-activity accounts.

The accumulation of Bitcoin generally tends to foreshadow a fresh bullish cycle. If we see all-time highs revisited, this would certainly whet publicly traded mining companies' risk appetite.

StormGain analytics group

(cryptocurrency trading, exchange and storage platform)