Cryptoverse: Bitcoin miners get stuck in a bear pit

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A bitcoin representation can be seen in an illustration photo taken at La Maison du Bitcoin in Paris, France, June 23, 2017. REUTERS/Benoit Tessier

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Sept. 27 (Reuters) – Save a thought for the beleaguered bitcoin miner.

By the end of 2021, miners were the toast of the city with a surefire path to profit: hooking up powerful computers to cheap power, cracking devilishly complex math puzzles, then selling newly minted coins in the booming market.

A year is a long time in crypto.

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Global bitcoin mining revenues have fallen to $17.2 million a day amid a crypto winter and global energy crisis, about 72% lower than last November when miners earned $62 million a day, according to data from Blockchain.com.

“Bitcoin miners have continued to watch the margins – bitcoin price has fallen, mining problems have risen and energy prices have skyrocketed,” said Joe Burnett, principal analyst at Blockware Solutions.

That has put serious pressure on some players who bought expensive mining machines or rigs, banking on rising bitcoin prices to recoup their investment.

Bitcoin is trading at around $19,000 and has not risen above $25,000 since August, let alone hit its all-time high of $69,000 in November.

At the same time, the puzzle-solving process to mine tokens has become more difficult as more miners have come online. This means they have to devour more computing power, further increasing operating costs, especially for those who don’t have long-term contracts for electricity pricing.

Bitcoin miners’ profits for one terahash per second of computing power have fluctuated between $0.119 and $0.070 per day since July, down from $0.45 in November last year and around its lowest level in two years.

The grim state of affairs could also remain here: Luxor’s Hashrate index, which measures mining’s revenue potential, has fallen nearly 70% so far this year.

Reuters Graphics

2140: THE LAST BITCOIN

It was painful for miners.

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

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

“The best time to get in is when the market is low. The same mining rigs that went for $10,000 earlier this year, you can now get that for 50% to 75%,” said William Szamosszegi, CEO of Sazmining Inc. plans to open a renewable energy-powered bitcoin mining operation.

Indeed, many miners are cutting back on buying oil rigs, forcing makers to lower prices.

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

Chris Kline, co-founder of crypto investment platform Bitcoin IRA, said miners should be “hyper-focused” on energy efficiency, both to reduce costs and avoid any potential impacts 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.

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

Our Standards: The Thomson Reuters Trust Principles.

The opinions expressed are those of the author. They do not reflect the views of Reuters News, which is committed to integrity, independence and freedom from bias under the Trust Principles.

The Valley Voice
The Valley Voicehttp://thevalleyvoice.org
Christopher Brito is a social media producer and trending writer for The Valley Voice, with a focus on sports and stories related to race and culture.

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