? Bitcoin has lost over 70% of their price since November’s all-time high,
? Bitcoin difficulty (the number of hashes needed to be generated on average to get Bitcoin’s Proof-of-Work and add a block) is still at its highest since the end of April, despite two recent drops,
? Electricity costs around the world are surging,
? As if all of the above was not enough, mining companies that have taken loans to finance their expansion now find themselves in a very delicate situation. Co-founder of a Seattle-based miner Luxor Ethan Vera in his recent interview to Bloomberg estimated the amount of loans taken by North American mining companies to neighbor $4 billion.
⛏️ As miners face a margin call or receive an electricity bill, they need to sell the bitcoin they have previously accumulated, and although many might have wished to sell more in November and wait out the current bear market, time travels are still out of reach. May and June were the months of the so-called “miner capitulation”, when big amounts of bitcoin were sent to exchanges and sold.
The most recent data shows possible signs of a reversal.
Glassnode’s graph of June 29th shows that weekly Bitcoin Miner’s Outflow Volume (total amount of coins that left miners’ addresses) has fallen sharply after spiking in late June. In fact, it has hit an 11-months low of $1.3 million. Also, weekly Miners to Exchange Flow reached a 5-year low of 2 BTC/hour.
Does it mean that most financially vulnerable miners have sold enough to keep themselves afloat, while others are still capable of limiting their bitcoin sales? It may well be.
While older mining rigs like Antminer S9 become unprofitable and are switched off, newer ones like Antminer S19 Pros and Whatsminer M30S+, combined with cheaper electricity, still ensure a lucrative business. Bitcoin difficulty not dropping dramatically despite plummeting prices is just one of its indicators.
Every crisis is a test for companies and people; those who withstand it will come in a leading position for the growth period. Crypto mining is no exception.