Cryptoverse: Bitcoin miners get stuck in a bear pit

A representation of Bitcoin is seen in an illustrative image taken at La Maison du Bitcoin in Paris, France, on June 23, 2017. REUTERS/Benoit Tessier

Sep 27 (Reuters) – Give a thought to the beleaguered bitcoin miner.

In late 2021, miners were the town’s toast with a surefire way to profit: hook up powerful computers to cheap electricity, crack fiendishly complex math puzzles, then sell newly minted coins in the booming market.

A year is a long time in crypto.

Global bitcoin mining revenue has fallen to $17.2 million per day amid a crypto winter and global energy crisis, down about 72% from last November when miners made $62 million. dollars a day, according to data from Blockchain.com.

“Bitcoin miners continue to watch margins shrink – the price of bitcoin has fallen, mining difficulties have increased and energy prices have skyrocketed,” said Joe Burnett, principal analyst at Blockware Solutions.

This puts serious pressure on some players who have bought expensive mining machines or rigs and bet on rising bitcoin prices to recoup their investment.

Bitcoin is trading around $19,000 and has failed to break above $25,000 since August, let alone revisit November’s all-time high of $69,000.

At the same time, the process of solving puzzles to mine tokens has become more difficult as more and more miners have come online. This means they have to gobble up more computing power, which further drives up operational costs, especially for those without long-term power price agreements.

Bitcoin miners’ profit for a terahash per second of computing power has fluctuated between $0.119 and $0.070 per day since July, compared to $0.45 last November and around its lowest level in two years.

The bleak situation could remain here, too: The Luxor Hashrate Index, which measures mining revenue potential, is down almost 70% so far this year.

2140: THE LAST BITCOIN

It was painful for miners.

For example, shares in Marathon Digital (MARA.O), Riot Blockchain (RIOT.O) and Valkyrie Bitcoin Miners ETF (WGMI.O) are down more than 60% this year, while crypto mining data center operator Compute North is down filed for bankruptcy last week.

But mining is ultimately a long-term proposition – the last bitcoin is expected to be mined in 2140, more than a century away – and a spying opportunity in the dark.

“The best time to jump in is when the market is low, the same mining rigs that sold for $10,000 earlier this year you can now get them at 50% to 75% off,” said William Szamosszegi, CEO by Sazmining Inc, which is planning to open a renewable energy Bitcoin mining operation.

In fact, many miners are restricting oil rig purchases, forcing manufacturers to lower prices.

For example, the popular S19J Pro drill rig sold for an average of $10,100 in January but is now selling for $3,200, analysts at Luxor said, also noting that bulk order prices for some mining equipment had fallen 10% in the past week alone.

Chris Kline, co-founder of crypto investment platform Bitcoin IRA, said miners need to be “hyper-focused” on energy efficiency, both to reduce costs and avoid the impact of climate change-related regulations.

“From managing their balance sheet, processing units, and energy costs, miners will try to stay afloat regardless of current market conditions,” he added.

Reporting by Lisa Pauline Mattackal and Medha Singh in Bengaluru; Edited by Tom Wilson and Pravin Char

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