Cryptoverse: Bitcoin Miners Get Stuck in a Bear Pit

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

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

By the end of 2021, miners were the toast of the town with a surefire path to profit: hook up powerful computers to cheap electricity, crack fiendishly complex math problems, then sell freshly minted coins on the booming market.

A year is a long time in crypto.

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

“Bitcoin miners have continued to see margins squeezed — the price of bitcoin has fallen, mining difficulty has risen and energy prices have risen,” said Joe Burnett, principal analyst at Blockware Solutions.

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

Bitcoin is trading at around $19,000 and has failed to reach above $25,000 since August, let alone regain 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 miners have come online. This means that they have to consume more computing power, and further increase operating costs, especially for those without long-term power price agreements.

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 last November and around two-year lows.

The bleak state may also be here to stay: Luxor’s Hashrate Index, which measures mining revenue potential, has fallen nearly 70% so far this year.

2140: THE LAST BITCOIN

It has been painful for miners.

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

Still, mining is ultimately a long-term proposition — the last bitcoin is expected to be mined in 2140, more than a century away — and some spying opportunities in the dark.

“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 get it for 50% to 75% off right now,” said William Szamosszegi, CEO of Sazmining Inc .open a renewable energy powered bitcoin mining operation.

In fact, many miners are cutting back on buying rigs, forcing manufacturers to cut prices.

For example, the popular S19J Pro rig sold for $10,100 in January on average, but is now selling for $3,200, analysts at Luxor said, also noting that prices for bulk orders of some mining machines had fallen by 10% just that last week.

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

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

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

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