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This morning, the “Year in Review” series dives into the world of crypto. Since the world of crypto is vast and fast-changing, this write-up will focus only on four main components: Bitcoin, Ethereum, Solana, and crypto miners.

A special thanks to our Cents Coverage Analysts who are helping the Cents team put these write-ups together! Today’s post on Crypto is brought to you by Jake H.

Morning Cents: For news and analysis covering macro, crypto, and business topics sign-up for our FREE daily newsletter Morning Cents!


In 2021, the term Web 3.0 was determined to be the next phase of the internet. The crypto-economy is still at the beginning of the growth curve, even after the huge growth seen throughout 2021. The blockchain has the potential to be the solution to some of the problems that have been identified in Web 2.0. As you can see below, we are still in 1998 in Web 2.0 terms leaving the potential of exponential growth ahead over the coming decades.


  • 65% YTD return
  • Suffered two major corrections during the year.
    • 1st: China banned cryptocurrency mining and eventually everything crypto.
      • Period: May – July
      • The market eventually recovered and has since held stable and healthy. Jake wrote a great piece on this topic in the ROIC portal here.
      • The price of bitcoin cut in half during this period.
    • 2nd: Overleverage in the markets that resulted in a flush down. Open interest had reached another all time-high and several other indicators indicated excessive froth in the markets.
      • Period: November – Present
      • The price of bitcoin fell ~30% during this period.
  • Both corrections happened after Bitcoin had hit an all-time high.
  • Implemented a network upgrade called Taproot – the network’s first upgrade in four years.
    • Batches multiple signature/transactions together to be validated by one public key.
    • Increases the decentralization of BTC by making it more difficult to track one transaction.
    • Lowered fees.
    • Intends to increase the number of transactions occurring on the network to allow developers to use smart contracts on Bitcoins blockchain effectively.

2022 Outlook

Going into 2022 in the short-term, Bitcoin needs to reclaim $53,000 where the short-term holder cost basis sits. Now that OI has drawn back down and the network hash rate has recovered, the network sits in a healthy position. While the macro environment continues to be uncertain, Bitcoin should be primed for another run in 2022. We expect to see institutional funds use Bitcoin for diversification, investors use it to hedge against inflation, and finally stay as the store of value cryptocurrency. After the Taproot upgrade Bitcoin could become a player in DeFi as developers work to build on the network, we should start to see advances in this technology throughout 2021.


  • 438% YTD return
  • Suffered only one major correction during the year which was due to the complete ban of cryptocurrencies by China.
    • Period: May – July
    • During this period the price of Ether fell over 50%.
  • Launched EIP 1559
    • Created an automated bidding system that sets the gas fee based off how congested the ETH network is.
    • Part of each transaction is now burned instead of being paid to the miner completing the transaction.
      • This had decreased the inflation of ETH.
  • Developers continue to work on more advanced layer 2 scaling solutions to allow users to transact on with low fees.
    • Goal is faster transaction speeds with lower cost, without sacrificing decentralization.
    • These solutions will help decongest the network and increase Ethereum’s usability and utility.
    • Arbitrum is currently the largest layer 2 scaling solution with a market cap of $2.25 billion.
      • Arbitrum allows users to transaction for low fees on L2.
  • Decentralized autonomous organizations (DAOs) saw huge adoption.
    • Form of venture capital fund that is decentralized and ran by the token holders using a voting process on the blockchain.
    • ConsitutionDAO raised $47 million to bid on one of the original copies of the United States Constitution.
  • NFT sales broke $10.7 billion in Q3, a 704% increase from Q2 as NFT’s continue to grow giving people digital properties.

2022 Outlook

Ethereum is expected to merge with the beacon chain proof-of-stake system in June. This merge will turn ETH deflationary by about 2% as users can stake ETH in nodes run by validators to complete transactions vs. miners completing them as of now in ETH 1.0. Post merge, if it does indeed happen in 2022, all of the funds staked in ETH 2.0 currently will be unlocked. This does pose a risk of a selloff as investors take profits in money that has been locked up throughout the past year. The merge will not make the price of gas fees lower, and layer 2 scaling solutions will continue to grow and expand their use through 2022. The NFT marketplace is expected to keep growing as major sports leagues, celebrities, and companies release and back projects increasing overall adoption.

Source: ultrasound.money


  • 9,603% YTD return
    • One of the fastest growing cryptocurrencies of the year
  • See Justin’s write-up on Solana here.
    • The post goes over the background, how its bonded proof-of-stake system works, comparing it to competitors, and a relative valuation.
  • There are several NFT marketplaces build in the SOL network now. Given Solana’s cheap and fast transaction speed this is an alternative to using the Ethereum network to buy/sell NFT’s.
  • Solana passed Cardano (ADA) in market cap and is now the 5th largest cryptocurrency.
    • Developers are flocking to the network for its fast/cheap transactions.
  • The network went down in September for 17 hours and users lost the ability to buy/sell on the network.
    • Validators determined the cause to be resource exhaustion caused by an overload of transactions.
    • It’s important to note that this could theoretically happen to any blockchain and there is no guarantee any network will be up and running at any given time.
  • The largest project on the Solana network currently is Serum, a decentralized exchange (DEX) that is governed by the token holders that get voting rights.
    • Serum’s current market cap is $1 billion.
  • Solana also has several other projects such as defi derivatives being build and scaled off the network.

2022 Outlook

Solana had a stellar year, growing into a top 5 cryptocurrency with real use. As blockchain technology continues to grow we believe there will be 2-3 main players like there are today in web 2.0 (think Google, Apple, Microsoft for example). SOL is making a real push to claim its spot at the top given its clear leadership and ability to scale. We see the growing pains of Solana as a reason to be bullish as it shows the attraction of users to a fast/cheap network. Users’ main complaints about the network in 2021 were the low number of validators and single-core node, the Solana Foundation. Over the next year, we’re watching to see Solana continue to attract users and push for a more decentralized network. Ultimately, the users will decide whether Solana is here to stay, we will be watching/talking to developers throughout the year to learn more about this new blockchain.


As of December 17, 2021

To value the miners, we like to use the Price/BTC. This metric shows the premium paid for the BTC holdings. This premium is then thought of as the price you are paying to own the actual business itself such as the locations and equipment.

2022 Outlook

In 2021 the three miners that we track have outperformed Bitcoin. This is even more apparent when Bitcoin goes parabolic. They are all collectively expanding their operations heavily by building new locations and ordering new batches of ASIC miners. Hut 8 (HUT) is one of the only companies that GPU mines alongside their Bitcoin mining, when ETH goes POS we will be watching how the company navigates the 50% decline in profitability. Over the next year, we will be tracking how each company continues to expand operations efficiently and effectively. These companies must continue to find clean ways to generate electricity for their operations to stay out of the crosshairs of regulation.

Popular 2021 Crypto Videos – Cents Invest

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