'Crypto winter' batters Bitcoin miners

 Many Bitcoin miners are forced to downsize or "plug" miners because of low profits or losses

According to experts, the decline in hashrate, while the mining equipment sold off is the clearest proof of the rigors of the "winter" that is taking place. Miners are forced to rebalance their operations in the context of the increasing cost of Bitcoin mining, but the return is very small.

“Bitcoin supply and demand are not in favor of both miners and the future price increase,” Yuya Hasegawa, a crypto market analyst at Bitbank, said in a blog post on May 17. 6.

Bitcoin mining is currently rated extremely difficult, as the hashrate reached an all-time high of 231,428 EH/s on June 12. Meaning, bringing in a Bitcoin is getting harder and harder, requiring more energy. But as soon as the difficulty peaked, the price of the coin plummeted to less than $20,000 per coin on June 17 - the steepest drop since 2020.

According to Hasegawa, to get out of this situation, the mining difficulty must decrease, or the Bitcoin price will increase to help miners make a profit. “If the current problem persists, miners are likely to sell Bitcoin as soon as its price recovers slightly. This slows down the rate of price increase, putting the digital currency in a sideways state for a while.” , he commented.

Diggers struggling

According to Blockchain.com, the total revenue of cryptocurrency miners has dropped to the lowest level in nearly a year. Share prices of listed companies such as Marathon Digital or Hut 8 Mining have all dropped over 41% in the past month alone.

Miners' revenue comes from Bitcoin. Therefore, when the digital currency plummeted to less than $20,000 per coin, they suffered huge losses. Not only that, as inflation increases in many countries, as well as energy prices are peaking, they face difficulties from many directions: high costs and lower revenue per Bitcoin generated.

Didar Bekbaouov, Kazakh miner and co-founder of mining company Xive, said he is "adjusting mining to new and realistic prices". Sharing with the FT, he admitted to turning off the "buffalo plow" when Bitcoin fell below $25,000 per coin.

Hut 8 Mining, one of the largest Bitcoin mining companies in the world, says it is preparing for a scenario where Bitcoin falls below the $20,000 mark, by reducing mining and hoarding energy resources. However, the company admits things are still difficult ahead.

"We have planned thoughtfully, but our ability to get through this period is still unclear. Many other companies have even acted on the haste of the market. They will likely face shortages. capital in the coming months, Jaime Leverton, CEO of Hut 8 Mining, told the FT.

Not only that, Bitcoin miners will have to face difficulties coming from the governments where they put their miners. Germany is now asking people to save energy as gas prices skyrocket. According to CCAF figures, the cost of mining per Bitcoin is estimated at about 15 GW of electricity per day – a huge amount of electricity and inappropriate in the difficult context.

Sweden's central bank Riksbank on June 10 also called on the government to ban Bitcoin mining. According to the report, cryptocurrency mining operations in the country currently consume "equal to 200,000 households per year".

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