December 9, 2022

Bitcoin is falling, how are the miners doing?

Last week we discussed why Bitcoin is falling despite buying from crypto enthusiasts and active accumulation of coins. Not only investors, but also miners suffer from falling prices. How bad are they?
Bitcoin is falling, how are the miners doing?

Image Source: Cryptocurrency Exchange StormGain

The Bitcoin network is "programmed" to create a blockevery 10 minutes. To maintain the speed at the same level, a change in the complexity of the calculation is used. So, with an increase in the number of miners, the complexity increases, and with a reduction in the total computing power, it decreases.

From the November highs, Bitcoin has already collapsed by44%, but network complexity and overall computing power continue to set records. Simply put, miners are plugging in new rigs despite a significant drop in price. Is mining really that profitable?Bitcoin is falling, how are the miners doing?

Image source: btc.com

The top ASIC from Antminer S19 Pro is stillgenerates income, now it is about $14. The queue for them at Bitmain exceeds half a year, and the current retail price on Amazon is $8,999. It is easy to calculate that with such inputs, the installation will pay for itself in two years at best.
Bitcoin is falling, how are the miners doing?

Image source: amazon.com

With such terms, Bitcoin mining is no longeris of interest to private individuals, and the ever-growing complexity, in principle, threatens self-sufficiency. Also, a lot depends on the home country and the cost of electricity. Large companies can afford to place equipment in optimal regions, which means that they will save income on the same devices, while the private trader will be forced to abandon mining.

The second aspect is the ability of publiccompanies to attract investment capital and, at the expense of investors, constantly upgrade equipment. A good example is Riot Blockchain. The company competes for the world leadership among public mining companies and constantly upgrades its ASIC fleet. Riot currently has 3 EH/s of processing power and aims to increase that to 12.8 EH/s by Q4. As a result, every year the company ends up with a loss, but continues to increase activity in attracting investments and buying equipment.Bitcoin is falling, how are the miners doing?

Image source: tradingview.com

Mining is alive, but it is becoming more and moredifferent from the principles of Satoshi Nakamoto. Instead of maximum decentralization, computing power is accumulated in the hands of big capital. With a further natural merger of mining companies, the situation will only worsen.
Bitcoin is falling, how are the miners doing?

Image source: glassnode.com

However, the current situation also has a positiveside: due to a shortfall in profits, miners are holding Bitcoin in the hope of future growth. A general reduction in supply supports its value.

Analytical group StormGain

(platform for trading, exchanging and storing cryptocurrency)