Key Takeaways

• Calculations based on the most recent data in the public domain estimate the “Proof-of-Work” cryptocurrency mining market in the U.S. to be about $212.04 million.
• As of October 2021, the U.S. had become the top destination for Chinese cryptocurrency miners, registering over one-third of bitcoin’s hashrate (over 35.4%) and marking a 428% hashrate increase from September 2020, according to data by the Cambridge Centre for Alternative Finance.
• On November 30, 2021, Griid Infrastructure LLC announced that it had agreed to go public with special purpose acquisition company (SPAC) — Adit EdTech Acquisition Corp in a merger deal valued at $3.3 billion, including debt.

Introduction

PROOF-OF-WORK CRYPTOCURRENCY MINING MARKET IN THE U.S.

• As of 2016, Proof of Work (PoW) “powered blockchains accounted for over 90% of the total market capitalization of existing digital cryptocurrencies,” according to a research paper by ACM Digital Library.
• An October 2021 Fortune Business Insights report estimated North America's cryptocurrency market at $273 million, a slight increase from $250.9 million in 2019.
• Thus, to determine the PoW cryptocurrency mining market in the U.S.:
• Percentage of PoW powered blockchains X the North America cryptocurrency market size
• 90% X $273 million = $245.7 million

• To estimate the U.S. size of the market, the percentage of U.S. GDP contribution to North America GDP is used.
• According to research, the U.S. accounts for about 86.3% of the GDP in North America. So, the PoW cryptocurrency mining market size in the U.S. will be equivalent to 86.3% X $245.7 million = $212.04 million.
• Calculations based on the most recent data in the public domain estimate the “Proof-of-Work” cryptocurrency mining market in the U.S. to be about $212.04 million. However, a recent report by CNBC notes that Foundry, a digital currency company helped to bring over "$400 million of mining equipment into North America."
• In this regard, the current cryptocurrency market reports have not accounted for the impact of the mass migration of Chinese cryptocurrency miners to foreign nations, including the U.S.

• According to Quartz, bitcoin miners in the U.S. consume an estimated 35 terawatt hours a year.
• One terawatt hour is equal to 1,000,000 megawatt hours, therefore, U.S. bitcoin miners consume over 35 million megawatt hours of electricity annually.
• Assuming a 90% rate for PoW powered blockchains, then U.S. bitcoin miners consume over (90% of 35 million megawatt hours) = 31.5 million megawatt hours.

• According to the latest statistics shared by Cambridge Centre for Alternative Finance (CCAF), the U.S. has overtaken China in terms of the global hashrate share.

• CCAF data estimates that the "U.S. is responsible for 35.4% of the mining activity, based on an analysis of 44% of the market's hash rate."
• Assuming a 90% rate for PoW powered blockchains, then U.S. PoW powered blockchains are responsible for (90% of 35.4%) = 31.86% (hashrate) of U.S. mining activity.

GROWTH RATE OF THE CRYPTOCURRENCY MINING INDUSTRY

• PR Newswire reported market growth estimates by three different market research companies. According to all reports, the cryptocurrency mining market is anticipated to continue growing.
• A Data Bridge Marketing report expects the cryptocurrency mining market to grow at a rate of 11.5% from 2021 to 2028: while a Market Study Report expects the industry grow at a CAGR of 16.1% from 2020 to 2025 to reach $1.61 billion from $888.2 million in 2019.
• However, a report by Industry Research expects the global Cryptocurrency Mining market size to reach $2.58 billion by 2026, from $1.01 billion in 2020, at a CAGR of 16.8%.
•  Different reports share varying growth rates but all point towards an expanding market. Most of the most recent reports provide a global overview, which includes segmentation based on regions.

• Before the ban on cryptocurrency in China, the county was responsible for 65% to 75% of all global cryptocurrency mining activity. After the ban, over 50% of bitcoin hashrate dropped off the global network.
• As of October 2021, the U.S. had become the top destination for Chinese cryptocurrency miners, registering over one-third of bitcoin’s hashrate (over 35.4%) and marking a 428% hashrate increase from September 2020, according to data by the Cambridge Centre for Alternative Finance.
• Kazakhstan has also emerged as the "world's second-biggest bitcoin mining location after the United States in recent months, according to the Cambridge Centre for Alternative Finance."
• After China's ban on cryptomining, Kazakhstan welcomed miners from the U.S., just like the U.S. Kazakhstan offers the cheapest electricity globally; however, the current influx of crypto mining activity is constraining the nation's power grid.

U.S. PRIVATE BITCOIN MINING HOSTING COMPANIES GOING PUBLIC

• On November 30, 2021, Griid Infrastructure LLC announced that it had agreed to go public with special purpose acquisition company (SPAC) — Adit EdTech Acquisition Corp.
• The merger deal was valued at $3.3 billion, including debt. The combined company will be trading on the NYSE under the new ticker symbol “GRDI.”
• GRIID expects to generate a revenue of $1.6 billion in fiscal year 2023. About $246 million of anticipated net transaction proceeds and an existing $525 million credit facility will fund GRIID’s growth and accelerate scale.
• At closing, "GRIID equity holders were to own approximately 90%, Adit EdTech public stockholders (8%), and Adit EdTech’s sponsor (2%) of the outstanding shares of voting stock."
• Some reasons for going public include the assertion “We are building an American infrastructure company with the largest pipeline of committed, carbon-free power among public bitcoin miners at the lowest cost of scaled production,” by Trey Kelly, chief executive of GRIID.
• Other reasons include GRIID's "large pipeline of low-cost, carbon-free power, distinctive access to next generation application-specific integrated circuits (ASICs), and market-leading execution that positions the company to generate attractive profitability and growth."

• On Wednesday 21, July 2021, cryptocurrency mining operator Core Scientific announced it is "listing on the NASDAQ through a merger with Power & Digital Infrastructure Acquisition Corp."
• The deal with the "special purpose acquisition company (SPAC) values Core Scientific at roughly $4.3 billion." The new company will be trading on NASDAQ under the symbol — XPDI.
• The new company anticipates fiscal year 2021 revenue of $493 million and $1.1 billion in fiscal year 2022.
• Core Scientific merged to grow its business and present opportunities to “invest in a leader in multiple XPDI target industry sectors of blockchain and frontier technology infrastructure.” The image below shows Core Scientific's mining stations
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  Source
   
• According to Darin Feinstein, co-founder of Core Scientific, some reasons for going public include the fact that the "company’s blockchain infrastructure business is “backed by more than 70 blockchain and infrastructure-related patents and applications;” thus, going public would help unite the companies and advance into the capital markets.
• Another reason for going public is to enable Core Scientific Inc. to "mine for digital assets and provide and develop hosting and other blockchain services at scale, using low cost, clean and renewable energy for a growing, global decentralized finance industry."

Research Strategy