Bitcoin Miners Profits Drop 72%

By way of their profit margins taking a significant hit, bitcoin miners are taking the full brunt of the ongoing crypto winter.

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According to data from Blockchain.com, global revenue from bitcoin mining – which is a process that involves powerful computers (or ‘rigs’) validating transactions on the blockchain in reward for freshly minted bitcoin – has dropped to $17.2 million a day, which is 72% less than November 2021’s daily figure of $62 million.

The fall in revenue comes from both sides of the mining coin, as not only have energy prices soared, but as we all know, the price of bitcoin has also steeply fallen (i.e., from an all-time high of $69,000 in November 2021, to failing to surpass $25,000 since August). Whittling down the numbers even more, miners’ profit for one terahash per second equated to $0.45 in November 2021, however since July, such figure has consistently fluctuated between $0.07 and $$0.119 (marking the lowest levels in two years).

To verify bitcoin mining’s sorry state even further, the Luxor’s Hashrate Index – which measures bitcoin mining revenue potential – has fallen almost 70% so far this year. Of course, such consensus has been met with tangible outcomes, as reputable companies in the space – such as Riot Blockchain and Marathon Digital – have seen their shares plummet more than 60%, whilst crypto-mining data company Compute North filed for bankruptcy last week.

Ultimately, such circumstances have left companies/individuals who’ve invested in expensive rigs with no option but to bank on the crypto and energy pendulums to eventually start swinging in the opposite direction.

With this in mind, and whilst the varying factors of the crypto/financial markets make bitcoin’s future price-path relatively ambiguous, what’s certainly more cut-and-dry is the fact that the cost of mining bitcoin almost certainly won’t be reducing any time soon. This is because, irrespective of the global rise in energy prices, the puzzles involved in verifying transactions (to ultimately mine bitcoin) become increasingly more complex as more are completed, further meaning that more powerful machinery – and therefore higher running costs – are essentially inevitable.

Overall, in referring back to the crypto and energy pendulums, what we can take from this is that miners will have their minds transfixed on the next crypto bull run, and/or a fall in the general price of energy (whether that be through technological or economical means).  

On a brighter note, not everyone is viewing such treacherous conditions as complete doom and gloom, as in coherence with the philosophy ’a bear market is the best time to build,’ the prices of mining rigs are currently being slashed by up to 50-70%, meaning that if there ever was a time to invest in crypto-mining capital, now is perhaps it.