Bitcoin mining was once profitable. In late 2021, miners were the main toast of the town with a guaranteed part to profit: hook up some powerful computers up to cheap power, resolve fiendishly complex maths puzzles, and then sell your newly minted coins on the booming market.
A year is quite a long time in Crypto.
Global revenue from bitcoin mining has plunged to $17.2 million per day amid a crypto winter and global energy crisis, down nearly 72% from last November when the BTC miners were racking up $62 million in a day, based on data acquired from Blockchain.com.
The head analyst at Blockware Solutions, Joe Burnett, stated:
“Bitcoin miners have continued to watch margins compress – the price of bitcoin has fallen, mining difficulty has risen and energy prices have soared.”
That has put lots of serious pressure on some of the operators who purchased expensive mining machines and rigs, banking on the rising bitcoin prices to recoup their investment. Bitcoin is trading around $19,000 currently and has failed to rise past $25,000 since August, let alone recover to reach November’s all-time high of $69,000.
Concurrently, the process involved in solving puzzles to mine tokens has become highly challenging as more miners have now come online. It means that they have to use more computing power, which has increased costs, mostly for those without any long-term power pricing agreements.
Bitcoin miners’ profit for one terahash per second of computing power has oscillated between $0.119 and $0.070 a day since July. The computing power has plunged from $0.45 in November last year and is almost at its lowest in the past two years.
The grim state of affairs might be here to stay, too: Luxor’s Hashrate Index, which measures Bitcoin mining revenue potential, has dropped by nearly 70% so far this year.
2140: The Last Bitcoin Mined
It has been quite a painful journey for the miners.
Shares of Marathon Digital, Riot Blockchain, and Valkyrie Bitcoin Miners ETF have lost over 60% of their value this year, for instance, while crypto mining data center operator Compute North filed for bankruptcy in the past week.
But, mining is eventually a long-term proposition – the last bitcoin is expected to be mined in 2140, which is over a century away – and some spy opportunities are available in the gloom.
William Szamosszegi, CEO of Sazmining Inc, said:
“The best time to get in is when the market’s low, the same mining rigs that went for $10,000 earlier this year you can get that for 50% to 75% off right now.”
Sazmining Inc is now planning to open a renewable-energy powered bitcoin mining operation. Notably, most of the miners are now cutting back on acquiring rigs, compelling makers to cut prices.
Buy Bitcoin NowFor example, the popular S19J Pro rig sold on average for $10,100 in January. However, it now sells for $3,200, as highlighted by analysts at Luxor. Moreover, prices for bulk orders of some of the mining machines have dropped by 10% in the past week alone.
The co-founder of crypto investment platform Bitcoin IRA, Chris Kline, said that miners would need to be ‘hyper-focused’ on energy efficiency, both to push costs down and to avoid any repercussions from the climate change-related regulations.
He added:
“From managing their balance sheet, processing units, and energy costs, miners will look to stay afloat regardless of current market conditions.”
