Bitcoin Mining Has Become Too Expensive for Miners amid Persisting Bear Market
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Since crypto miners can no longer afford it, mining Bitcoin has grown more and more difficult. As a result, it is anticipated that the network’s hashrate will decrease because miners cannot even break even, let alone make a profit.
Numerous financial pressures have been placed on some Bitcoin miners over the past few months. Core Scientific, Argo, Compute North, and Iris Energy are among those mentioned.
Luxxfolio recently provided an operational report that discussed the pressure the mining industry was under. The miner made clear that despite having paid off its debt and switched to less expensive immersive mining, it was still not profitable. Most importantly, it stated that it would have to think about permanently ceasing operations if it could not find a partner or buyer for its mining operation in New Mexico.
These circumstances are typical of what the larger mining industry is experiencing. The hashrate decline is what investors are worried about.
In October, both the difficulty and the hashrate reached record highs. This was viewed as welcome news because a secure network necessitates a greater hash rate. But things have changed quite quickly.
More shutdowns might be in store because Bitcoin mining isn’t currently profitable enough. One bitcoin presently costs roughly $19,300 to mine, which is too expensive given the current state of the economy.
Additionally, energy costs have increased in 2022, which has significantly slowed the growth of the mining sector. Another factor is the possibility of global recession and inflation.
Stocks of Bitcoin Mining Companies Has Also Been Badly Hit
The stocks of companies that mine bitcoins are also suffering in the meantime. Year-to-date (YTD), Hut8 is down 73%, while Canaan is down 44%. Other significant decreases include those for Bitfarms (82%), Riot Blockchain (73%), and Hive (77% YTD). The Argo blockchain, which is down by a staggering 90%, is the same.
The sector’s tumbling stock prices make it abundantly evident how the bear market is affecting significant Bitcoin miners.
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