Published: February 15th, 2023
After weathering a significant downturn to its business in the final quarter of 2022, leading Bitcoin Miner Iris Energy said this week that its hash rate is rising again to levels last seen prior to the FTX meltdown.
For the next few months, the company’s self-mining capacity is forecast to lift from two exahashes per second to five. A single exahash equates to one quintillion hashes, which represent possible solutions to the complex math equations required to approve and confirm a Bitcoin transaction.
According to figures from Glassnode, BTC's recent rise above USD 20,000 helped push the average Bitcoin miner back into the black, even with the hefty costs of operating a mining machine.
A press release on Iris Energy’s website says the firm has also agreed a financing deal with Bitmain, the manufacturer of Antminer cryptocurrency mining servers, to purchase a round of new S19j Pro miners. That will expand Iris’s data centre capacity by 4.4 exahashes per second.
The recent rise in Iris’s hash rate looks to be enough to overcome the company’s loss of 3.6 exahashes experienced in November. The downturn in transaction volume forced it to mothball some of its mining infrastructure, which also secures loans worth ca. USD 100 million.
Like many mining firms last year, Iris found itself in a squeeze between spiking energy costs and cratering BTC prices. Cash flow fell to a trickle and made it difficult to cover payments to creditors.
Core Scientific, America’s biggest Bitcoin mining facility, ended 2022 with a bankruptcy filing. Another large firm, Argo Blockchain, saw its business crippled in December by a polar vortex winter storm that closed its Texas data centre.
Iris says it has experienced a turnaround and that current obligations under its 10 exahash contract with Bitmain have been fully resolved, leaving the company free of debt.
While it's too soon to declare the good times are back on the basis of one mining company’s turnaround, there have been signs recently that the crypto market might be returning to a happier place.
Alongside BTC’s recent price rises, In October 22, analysts noted an extended correlation between BTC’s price and the price of gold. That pointed to investors using BTC as a hedge against broader volatility, particularly in stock markets. For an asset traditionally shunned by investors because of its penchant for sudden and dramatic dips and spikes, that represented a notable shift.
That same month, Bitcoin's price volatility largely vanished. Data from blockchain analytics firm Kaiko showed that BTC's 20-day volatility had been similar to the NASDAQ for the first time in nearly 24 months. In an unexpected swapping of roles, Bitcoin’s price had been more or less the same since the beginning of September. The NASDAQ and the S&P 500 both dropped by 12 per cent and 11 per cent respectively in the same period.
Bitcoin’s price has historically been correlated with technology stocks, though with a higher ‘beta’ (propensity for volatility) than other financial assets. Despite impressive gains posted in 2021, its high beta rating has kept many investors from relying on it as safe-haven asset. Despite a price plunge in June, BTC and other major cryptos have been some of the best-performing assets in Q3, after the mighty Greenback.
Bitcoin’s price did drop back to lows last seen in 2020 during the week commencing 10th October, after core US inflation topped another 40-year high. Both BTC and equities fell on the news, before quickly bouncing back to their previous ranges.
The previous plunge seen in June followed the release of American inflation data for May, which showed consumer prices rising at a burning hot rate of at 8.7 per cent. Investors saw it as a sign that the Federal Reserve wouldn’t be altering its aggressive policy course any time soon, prompting a risk-off move that shifted money away from riskier assets.
However, while high inflation has held firm for months, crypto’s price action hasn’t surged or plunged with subsequent updates to the consumer price index (CPI) inflation measure. Stocks, on the other hand, have been in a slow-but-steady decline.
BTC’s newfound stability was all the more notable given the hawkish stance taken by central banks worldwide, which had turned many bonds into an opportunity for rapid gains. As Reuters reported in September, Fed policy sent bond yields skyrocketing in 2022.
2022 was a depressing year for many crypto enthusiasts, with market leader Bitcoin sinking to around a third of its 2021 high. There were periods of sudden surges followed by further drastic dips. Even crypto leaders were telling traders to go forward with added caution. As far back as May 2022, Binance CEO Changpeng Zhao told a Reddit AMA session that most crypto traders should diversify their holdings
Zhao said his own holdings were spread between Bitcoin (BTC), Binance Coin (BNB), and other cryptos, but all on the Binance exchange. 'I use my Binance Card everywhere I go,’ he said.
The crypto entrepreneur cut his teeth by designing trading systems for the Tokyo Stock Exchange and working on Bloomberg’s Tradebook derivatives trading platform. He launched Binance in 2017 and now control 30 per cent of the company.
In the May Reddit session, Zhao answered a number of questions about the exchange’s business, including its controversial decision to keep trading LUNA even as the coin collapsed. He also discussed how Binance handles custody of trader funds, and the development pipeline for Binance Chain.
Answering why the crypto exhange resumed LUNA trading after validators halted it when the cryptocurrency’s value fell to USD 0.00 on 13 May, Zhao said that by continuing trading, Binance was able to put pressure on the validators to re-start activity.
– Mark de Wolf for FX-List