Mining trends for 2023

Key points: 

• Public miners will focus this year on strengthening their balance sheets and minimizing costs after a shocking year for bitcoin.
• Analysts predict that minimizing the cost of bitcoin mining could lead to public miners going private or merging with other companies by 2023.
• According to analysts, bitcoin miners will also increasingly hedge their risks in 2023 through the use of bitcoin mining derivatives, including those that allow miners to sell their future hash rate at a specific hash price. 
• The Hash Rate Index also predicts that the ongoing Bitcoin bear market may end in 2023, referencing historical BTC price cycles.
• However, a full-blown bull market won't start until traditional financial firms are ready to enter the bitcoin market, which analysts say is still a year or two away.

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Public miners will focus this year on strengthening their balance sheets and minimizing costs after a shocking year for bitcoin, according to industry analysts.

Hash Rate Index bitcoin analysts Jaran Mellerud and Colin Harper predict that minimizing the cost of bitcoin mining could lead to public miners going private or merging with other companies by 2023.

In a blog post titled “10 Predictions for Bitcoin Mining in 2023,” the analyst noted that public miners are subject to strict reporting obligations such as spending millions of dollars on annual reports.

After many bitcoin mining stocks plunge 90% in 2022, public miners could slash management costs by going private or merging with other companies to share costs.

In addition to predicting that 2023 will be the year of Bitcoin miner mergers, the Hash Rate Index also predicts a massive restructuring of the Bitcoin mining industry. Analysts believe strengthening balance sheets will be a top priority for bitcoin miners in 2023 as they try to avoid bankruptcy.

The unsustainable debt levels of some bitcoin miners will force them to undertake debt restructuring as their only option, analysts noted. Debt restructuring could mean negotiating lower interest rates or extending debt maturities, the authors added.

According to analysts, bitcoin miners will also increasingly hedge their risks in 2023 through the use of bitcoin mining derivatives, including those that allow miners to sell their future hash rate at a specific hash price. “We will see an initial trend of miners trying to hedge everything that can be hedged, as might be expected in more mature commodity-producing industries,” Mellerud and Harper said.

As for broader industry predictions, the Hash Rate Index also predicts that the ongoing Bitcoin bear market may end in 2023, referencing historical BTC price cycles. However, a full-blown bull market won't start until traditional financial firms are ready to enter the bitcoin market, which analysts say is still a year or two away.

Analysts predict Bitcoin hash rate growth may also slow in 2023, while mining equipment becomes cheaper.

The Hash Rate Index Bitcoin Mining Forecast comes at a time when the cryptocurrency mining industry is going through a major crisis driven by Bitcoin losing around 60% of its value in 2022. As much as 100% of public miners are forced to sell almost all the cryptocurrencies they mined in 2022 to survive the crypto winter.