Bitcoin Miners become Trapped in a Bear Pit in the Cryptoverse

Bitcoin Miners become Trapped in a Bear Pit in the Cryptoverse

Think of the trapped bitcoin miner.

By the end of 2021, miners were imbuing the town with a sure-fire path to profit: connecting powerful computers to cheap power, solving complex math puzzles, and then selling freshly minted coins into the booming market.

General is a long time in encryption.

Global bitcoin mining revenue plunged to $17.2 million a day amid the crypto winter and the global energy crisis, down 72% from last November when miners were amassing $62 million a day, according to Blockchain com data.

bitcoin-miners-become-trapped-in-a-bear-pit

“Bitcoin miners continue to monitor margin pressure: the price of bitcoin has fallen, mining difficulty has increased, and energy prices have skyrocketed,” said Joe Burnett, senior analyst at Blockware Solutions.

This has put great pressure on some players who have bought expensive mining machines or rigs, relying on rising bitcoin prices to recoup their investment.

Bitcoin is trading at around $19,000 and hasn’t been able to break above $25,000 since August, let alone reclaim its November high of $69,000.

At the same time, the process of solving mining puzzles is becoming more and more difficult as more miners come online. This means that they have to gain more computing power, which leads to increased operating costs, especially for those without long-term energy price agreements.

Bitcoin miners’ earnings per one tremor 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 two-year lows.

The dismal situation may be here to stay as well: the Luxor Hashrate index, which measures mining earnings potential, is down nearly 70% so far this year.

It was a pain for the miners.

Shares of Marathon Digital, Riot Blockchain, and the Valkyrie Bitcoin Miners ETF are down more than 60% this year, for example, while crypto-mining data center operator Compute North filed for bankruptcy protection last week.

However, mining is ultimately a long-term proposition: The last Bitcoin is expected to be mined in 2140, more than a century later, and some spying opportunities remain in the shadows.

Said William Szamosszegi, CEO of Sazmining Inc, which plans to open a bitcoin mining operation powered by renewable energy.

bitcoin-miners-become-trapped-in-a-bear-pit

In fact, many miners are reducing their purchases of excavators, forcing manufacturers to lower prices.

For example, the popular S19J Pro rig sold for $10,100 in January on average, but is now selling for $3,200, Luxor analysts said, also noting that the wholesale order prices of some miners fell 10% last week.

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

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

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