The price of bitcoin (BTC) is down about 70% from its last all-time high (ATH) and miners are bearing the brunt of this sharp drop. They are affected by fear, uncertainty and doubt (FUD). Six key data sets illustrate the effects of bear market in bitcoin (BTC) miners.
Monthly Earnings: The State of the Mining Industry
and square bear market, bitcoin miners are experiencing a considerable drop in revenue, as seen in the chart above. Monthly mining revenue in June 2022 registers its lowest level in 18 months. From August 2021 to April 2022, miners enjoyed nine consecutive months of at least $1 billion in total revenue. May put an end to this bonanza and revenues continued to fall in June.
Taking a closer look at mining revenue, transaction fees (Rate) are an important (and hotly debated) income category. in a bull marketthe fees usually represent a significant percentage of the miners monthly earnings, obviously in its entirety bear market income of Rate They’re falling. From August 2021 to May 2022, the fees were around 10-15% of monthly income, but since August, this figure is around 1%. In fact, since August, fees have not accounted for more than 2% of mining revenue, as shown in the line chart above.
the bear markets often cause a precipitous drop in the prices of platforms of mining, we see it clearly in the graph above. Since the beginning of the year, the prices of platforms (regardless of efficiency and profitability levels) was reduced by 50-60%. If the price of bitcoin (BTC) continues to fall, so will the prices of mining hardware. (An opportunity to change teams?)
Of course, machines that are no longer profitable are scrapped. This is clearly visible in the hash rate percentage provided by Antminer S9s, an older generation platform developed by Bitmain. Compared to a 35% share of the hash rate coming from these machines a year ago, S9s now contribute just 5% of the total hash rate, according to data from Coin Metrics. ” At these bitcoin (BTC) prices, the S9 is just junk Coin Metrics analyst Parker Merritt said.
Mining income also depends on your computing power: the hash price (hash price), measures revenue in dollars per unit of hash power activated per second per day. This metric fluctuates and can go down, even when the price of bitcoin (BTC) goes up. The chart above shows the growth in mining difficulty and the drop in hash price since the beginning of 2022. At the end of June, the price of hash fell below $0.10 for the first time since the end of October 2020. .
The drop in share prices of crypto mining companies is probably the strongest sign of current market conditions. Most crypto mining companies have significantly undervalued physical mining assets, thus operating with shrinking profit margins as the price of bitcoin (BTC) falls.
The chart above shows the normalized one-year performance of a dozen different Nasdaq-listed crypto mining companies. Almost all stocks have lost at least 60% during this period. The Stronghold Digital Mining stock even lost 94%.
The price of bitcoin (BTC) significantly affects the income of miners: less than Rate, a less profitable material (or even zero) and probably an increasing energy cost. It remains to be seen what bitcoin (BTC) will do for miners to develop a profitable strategy and thus maintain network security. Another sell-off could lead to an even more violent crash.
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Subprimes, financial crises, runaway inflation, tax havens… Bitcoin was designed for greater transparency and perhaps finally a game changer. I try to understand this new environment and try to explain it myself. The road is certainly long, but it is worth it.