By Franklin Smith
Bitcoin (BTC) mining operations took a blow globally in 2022. Miners are witnessing their return margins fade as BTC price plus mining difficulty remain elevated. Meanwhile, miners and other associated attributes have suffered at the hands of this concerning issue.
No Longer Usual
Though Bitcoin displayed some crucial survival signals, miners and their associated operations remained in the past. Events like China’s BTC mining ban have indelibly altered the mining landscape following 2021’s bull run and miner migration.
BTC mining profitability climbed to multi-year peaks in 2021. However, the index is nearing ATLs (all-time lows). Bitcoin’s platform hashrate underscores this case. A graph shows BTC’s 7-da MA hashrate gained 7% only in the second quarter of 2022. The scenario remains grim considering 2022 Q1’s 15% and 27% in 2021 Q4.
Most miners have halted their operations as costs exceed profits amidst the current hashprice atmosphere. Moreover, the situation might worsen. The latest blog suggests slow hashrate growth this year unless BTC reverses.
Nevertheless, credit crunches, waning Bitcoin price, and surging energy costs warrant restricted hashrate growth plus capitulation by high-cost, over-leveraged miners. Furthermore, 2022 has seen BTC mining rigs surging in price.
Bloodbath
BTC mining ASIC Price Index recorded significant drops since the year started to Q2 closing. The outcomes were below 38 J/TH (51% drop), 38-68 J/TH (66% decline) and above 68 J/TH (56% drop).
Meanwhile, mid-generation machines are (still) operating with power costs beneath $0.07/kWh. Bitcoin miners who used to keep all their mined coins are trimming inventories to remain solvent and pay bills.
As if that was not enough, mining rigs saw faded demand amidst the deteriorated financial space. Unlike inadequate capacity last year, TSMC recently stated that chip demand declined substantially.
Firms are trimming orders by enormous margins in Q2. Nevertheless, beware the 2nm technology will see mass production come 2025. How will the mining landscape appear by then? Only time can tell.
What are your views about the above content? Are we staring at harsh conditions within the financial industry? Indeed, the worst isn’t over yet. Stay tuned for upcoming updates.