Is there really a mining crisis?

The news of increased btc sales by miners has joined the many others that are terrorizing traders these days, much to the chagrin of the Fed, which is trying hard to curb a little more upward pressure to keep Americans' money supply still low.

In fact, the news should be put into context, thus adding that these sales are taking place in an industry where since last year there has been a continuous increase in network difficulty, which has risen 132 percent since the last bull market, despite the fact that revenues have fallen 56.7 percent due to falling share prices.

The "difficulty" is a measure of competition among miners in obtaining new blocks.

In a thriving industry, the more miners in the market, the higher the competition among them, the higher the difficulty.

In contrast, in a down industry, where many mining farms close and the few remaining ones struggle to keep going, there is less competition and therefore also less difficulty.

The current high level of distress, which has been increasing unabated despite falling prices, therefore suggests that existing miners have expanded their operations and/or new miners have joined the network despite the massive reduction in revenues.

Therefore, it is likely that the recent market sales of btc by miners were not done to "stay afloat" in a difficult time, but out of the needs of industry expansion.

All the opposite, then, of an industry in crisis....

In the blockchain industry, we are also witnessing a similar phenomenon, in which while the listings of companies in the industry that are present on the stock exchange are being sold, the value of unlisted companies on the contrary is increasing, due to a relentless flow of investment in new projects that has never stopped since 2021.

This is a clear sign that private capital, which invests directly in companies outside the stock exchanges, is not at all worried about the current pullback we have seen in the markets.

For example, well-known investor Andreessen Horowitz is raising an additional $4.5 billion to invest in new projects.

Even more interesting is the Starkware project, which just raised $100 million in its Series D capitalization round, bringing the company to an impressive $8 billion valuation.

Starkware has created the so-called "ZK-stark" technology that seeks to solve the scaling problem in the Ethereum blockchain (ETH).

Without going into technical details, I will just say that this protocol allows many more transactions to be executed at the same time while reducing transaction costs.

When we consider that Starkware was valued at only $495 million in June last year, it means that the company's valuation has increased 16 times in the past 12 months.

The fact that this increase occurred despite the current downturn in cryptocurrency markets makes the deal even more significant.

To better understand what this means, we need to imagine the way these investments happen

It takes months to put together a large $100 million deal. Investors therefore had a long time before finalizing the purchase. And in all that time they would have easily had the opportunity to cancel the deal...but they didn't....This says a lot about what big investors really think about the current bear market.

So, in summary, both the mining and blockchain industries show no signs of letting up at all, in fact they continue to make progress in projects and money invested, in contrast to the bear market of stock exchanges, which is increasingly influenced by external factors related to inflation control by financial elites.

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