In 2022, the crypto industry witnessed plunging prices, a shrinking market cap, and institutional failures. Despite that, in terms of the on-chain statistics, the №1 crypto Bitcoin scored major progress over the past year. Today, we will fully explore three on-chain indicators.
1. Bitcoin hashrate in 2022
The Bitcoin hashrate exceeded 246 EH/s on February 12, 2022.
The figure hit 271 EH/s at block height 733,197 on April 23 and reached 325 EH/s at block height 758,138 on October 11.
Moreover, the Bitcoin hashrate set a historical record of 347 EH/s on November 12.
Although the BTC price underperformed in 2022 compared to the 2021 records, the Bitcoin hashrate surged. Data from Hashrate Index shows that the Bitcoin 7-day average hashrate grew 41% year on year. Meanwhile, despite the crypto bull in 2021 when the BTC price peaked at $69,000, the year-over-year hashrate growth was merely 18%.
Based on the moves made by the crypto mining companies that went public in 2021, we can tell that these mining firms started expanding their operations after they earned handsome profits from the crypto bull in 2021. More specifically, they started to purchase mining machines and build new mining farms on a large scale. For instance, according to figures recorded in January 2022, Core Scientific owned about 67,000 independent mining machines (6.6 EH/s) and more than 80,000 third-party mining machines (6.9 EH/s). Other large mining firms also continued to expand their scale, which strained their liquidity and brought hidden troubles to themselves.
At the same time, the massive expansion sent the Bitcoin hashrate soaring in an unprecedented manner in 2022, and made the network safer. All in all, a large hashrate will facilitate the future devolvement of Bitcoin.
2. The income of BTC miners in 2022
In September 2022, ETH mining, once a source of huge profits for PoW miners, was terminated along with the implementation of the Merge, and Bitcoin became one of the few major income sources for the miners. Due to external factors such as the macro policy adjustments by the Fed and internal incidents like the fall of LUNA and Three Arrow Capital, the crypto market turned bearish in 2022, and the BTC price plummeted. As such, the income of BTC miners plunged from the 2021 level. According to Hashrate Index, BTC miners earned $9.55 billion in 2022, down 43% compared with the $16.75 billion earned in 2021.
But if we compare the figures with records in 2020 or 2019, it will be clear that the annual income of BTC miners in 2022 approximately doubles the figure recorded in previous years. The primary reason is that the BTC price had stayed below $10,000 for most of the time before May 2022, and didn’t surge until the third halving on May 12. Meanwhile, as the income of miners is directly linked to the BTC price, they earned much more than they did in 2020 on average, despite the sluggish price of BTC in 2022.
3. Growth of the Lightning Network in 2022
The Lightning Network, a Bitcoin Layer 2 scaling solution proposed in 2015, allowed Bitcoin to realize nearly instant transaction processing and negligible handling fees, providing an enabling environment for everyday micropayments. After El Salvador, a small country in Central America, adopted Bitcoin as its legal tender in 2021, the large local demand for Bitcoin payments pushed the Lightning Network into a period of rapid growth.
According to 1ML, the number of Lightning Network nodes increased from 8,249 to 15,646 throughout 2022. Meanwhile, Lightning Network’s capacity surged from 3,350 BTC to 5,260 BTC, and the number of channels grew from 37,298 to 69,462.
Based on the above figures, we can estimate that the Bitcoin Lightning Network achieved a staggering growth rate of over 85% in 2022. At the same time, the Lightning Network owes its remarkable performance to the contributions made by projects including Zap, Strike, and Lightspark.
Arcane Research pointed out in the annual report that Bitcoin has remained bearish for 376 days, almost as long as the bear market in 2018. Perhaps this also signals that the gloom might end soon in 2023. Will Bitcoin surprise the market in the new year? Let’s wait and see!
