Bitcoin mining profitability has taken a hit as the price of Bitcoin has fallen below $58,000. This drop in price has left only five mining rigs profitable for their operators, indicating a potential local bottom for the market.
Mining rigs, which provide the computing power needed for blockchain networks, are facing increased operational costs. According to mining giant F2Pool, at a rate of $0.08 per kilowatt-hour (kWh), any ASICs less efficient than 23 W/T are operating at a loss. This means that only four of Antminer’s rigs and one Avalon rig are currently profitable, as long as Bitcoin’s price remains above $53,100. All other miners are now costing more to run than the rewards they generate for their operators.
Miners play a crucial role in blockchain networks by supplying computing power in exchange for rewards in the form of tokens. These rewards are typically sold by miners to cover their operational costs, which can be quite substantial. In fact, some miners have even had to file for bankruptcy in recent years due to these costs.
During June, miners were a significant source of selling pressure on Bitcoin, with over $1 billion worth of BTC being sold over a two-week period while prices fluctuated between $65,000 and $70,000. However, some market observers believe that the current unprofitability of miners could actually signal a local bottom for the market, as there is now less selling pressure.
Dovey Wan, a partner at crypto fund Primitive Crypto, noted that Bitcoin miners are close to capitulation, with S19 miners breaking even at $52,000. This situation could create the perfect conditions for a local bottom in the market.
Overall, the decline in Bitcoin mining profitability is a reflection of the challenges faced by miners in the current market environment. With only five rigs remaining profitable at current price levels, it is clear that miners are struggling to cover their operational costs. This situation could have implications for the broader market, as the actions of miners often impact the price of Bitcoin. Investors will be closely watching to see how miners respond to these challenges in the coming weeks and months.