Bitcoin miners forced to wind down loss-making business
Bitcoin miners forced to curtail operations to mitigate losses: electricity prices rise and cryptocurrency prices fall, depriving miners of profits
According to Blockchain.com, bitcoin’s hash rate has fallen 4 percent since the beginning of the week. This suggests that bitcoin miners have reduced the computing power needed to solve crypto and blockchain tasks.
Aggregate revenues earned by miners have also fallen to their lowest levels in the past 12 months. Marathon Digital and Hut 8 stock prices, for example, fell about 40% last month, and Argo Blockchin fell 35% in price.
Didar Bekauov, co-founder of Kazakh mining company Xive, said he had to stop unprofitable operations when bitcoin fell below $25,000. Now the company has to adapt to the new reality.
Meanwhile, rising energy prices, partly due to the conflict in Ukraine, are making life difficult for miners.
“There are a lot of companies in the industry that are highly dependent on fluctuations in energy prices,” said Marathon Digital spokesman Charlie Schumacher. “They’re under pressure from two sides: energy prices are going up, and bitcoin mining profits are going down.”
Large companies tend to have fixed energy costs and have a financial safety net. This means that small companies will bear the brunt of the blow, and they can also become victims of takeovers. Argo Blockchain CEO Peter Wall expects the “first wave” of takeovers as early as next year.
“Companies that have thoughtfully prepared for the downturn will likely survive this period, but many have acted impulsively, so they will have financial problems in the coming months,” commented Hut 8 CEO Jamie Leverton.
Hut 8 has not wasted any time and has accumulated more than 7,000 BTC, which will help it in the crisis and will go to possible acquisitions.