As digital asset markets have gyrated wildly post TerraUSD’s collapse, it has rekindled debate about a perceived ‘crypto bubble’ and the sustainability of crypto assets generally. At its recent nadir, Bitcoin was trading just above $24,000 on May 12th – its lowest price since July 2021.

We should not be surprised by wild fluctuations. Markets exposed to frontiers of technological progress are often characterized by high risk, high reward, speculation, and fluctuations in sentiment. This is not necessarily a bad thing. Risk appetite and the pursuit of above-average returns on investment are core to capital and resources being allocated efficiently – which includes sectors that the most conservative accountants may demur from.

The temptation to reach long-term conclusions from short-term trends seems more pronounced in crypto than in almost any other industry. Frequently absent from the analysis is differentiating between cryptocurrency trading and the wider crypto economy. This is particularly misleading vis-à-vis crypto’s underlying and enabling industry – digital asset mining.

Digital asset mining is a thriving sector providing crucial infrastructure for the future blockchain economy. Whilst much current mining activity is connected to Bitcoin, the capacity to process blockchain protocols at scale is not – in principle – bound to any single cryptocurrency.

As an industry, crypto mining is akin to mining precious metals or other raw materials – hence the derivation. Successful miners consider real estate, energy costs, building regulations, or sourcing the most powerful and efficient machines. Bitcoin’s daily price ranks very low on their priority list, much like an oil & gas company executive will not be overly distracted by the daily peaks and troughs of West Texas Intermediate.

Data produced by Sabre56, reflecting the performance of large digital asset miners, shows revenue hit a post-halving low point of $2.2/Terahash (TH) in July 2020. There was minimal read across to Bitcoin prices at that time, which were 300% higher than a year before (August 2019), and trending upward.

The August 2021 high was $10.5/TH, and in April 2022 was $5.4/TH. The corresponding average Bitcoin prices at both times were in a tight range: $45,500 to $41,500.

Finally, the record revenue for miners was in August 2021, a four-fold increase from a July 2020 low. This coincided with Bitcoin trading 31.2% below its all-time high (of over $65,000) in April 2021.

In both the short and long term, several factors affect miners’ earnings: difficulty adjustment, global hash power, electricity costs and Bitcoin price. But as the data above shows, there is little evidence of any sort of direct relationship between the Bitcoin price and mining revenues.

Of course, a digital asset bear market is not ideal for mining businesses. It is a function of the welcome dynamics of free markets. Miners have many ways to apply risk management strategies. Making a profit, as in any other industry, depends on running efficient operations with mining machines acquired at competitive rates. Miners leading prudent business models will weather economic headwinds and any dips in overall crypto sentiment.

Optimal data center architecture, best practice operations, and new computational technology applied at scale are not unintended side-effects of the crypto economy. They are possibly its most important dividends.

Mining is underpinned by the long-term value of using cutting-edge technology to build a blockchain infrastructure capable of supporting myriad use cases.

This is a vital point to remember amidst short-term headlines of crypto-asset price trading patterns.

This article is contributed by Phil Harvey, CEO of Sabre56. The views mentioned are the opinions of the author.