Topic: [2022-06-17] Bitcoin mining becomes unprofitable as BTC price falls - page 2. (Read 685 times)

I still find it's not that different. After all, the mining revenue heavily depends on Bitcoin price. I fail to see there's assurance mining always profitable.

@ETFbitcoin. It is very different hehe. A loan to pay for costs of operation for bitcoin mining, where there's an assurance of monthly mining revenue is different from taking a loan only to speculate on bitcoin's price and hope it will pump. The miner has a real business, the speculator has nothing but expectations.

I reckon that miners should find a new type of lender. Tether, iFinex, Tether should be very perfect for this kind of situation hehe. I am not sure what would be the business arrangement, however, everyone knows Tether accepts commercial papers for short term loans. This would be very useful for miners if their problem is monthly cashflow. They can leverage 1 month of expenses and repay this then reborrow repeatedly until the market and difficulty are stable.

@ETFbitcoin. It would kill their business. How will the miners repay the loan?

When it comes to traditional business and banks, yeah, that's the rule.
Unfortunately for me as I don't have those advantages, and fortunately for bitcoin's security when it comes to this business you can get a lot of investors that would throw money at you without a real plan on the paper, not even mentioning a fully running business with yearly contracts with a stash of coins set aside, they will get the money, and once you secured a bit, taking into account that the gear is already paid, the only expenses are electricity and rent you can keep it one for a while mining at a tiny loss. Not even mentioning the outrageous cheap rates some of these big guys have for power.


As I said above, from banks they will get the same answer as shale oil a few years ago, no cash for you!
For the bear market thing, well, bitcoin going back to 30k and even 40k won't be that much of a relief for miners, a lot of hashrate is already ordered so if the price goes up it will get plugged in rising difficulty diminishing revenue, for let's say good times, not extraordinary good like back last year in April, we would need around 60k at same difficulty.
24 cents instead of 8 per TH/s, an s19 making 24$ a day, burning 8$ at 10cents/kwh, ROI in a year and something, all numbers rounded up to make it easier.

It might...

That's the problem. You can't run a business based on speculation. IRL, you can't go to the bank to borrow money while saying to the banker "my business idea will maybe work" They want something sure and are well trained to evaluate the risks.
Even if the client has collateral, they consider it as a +1 point, but that doesn't make it bulletproof

Now considering the mining industry, things aren't smelling the sun currently. Most are pessimists about the market (including me). I don't want to say it will never come back on track, but it's not coming anytime time soon. Surely not during 2022, hence hesitations.

The good news is the crypto market isn't the only one to go down. Apple, Facebook, and Gold etc are in the same shoes

while whales are still here...sent more than 50,000 BTC to crypto exchanges on 20 and 21 June 2022
exodus!

@stompix. Also, if mining is really unprofitable for the biggest miners, they can get a loan in fiat against their bitcoins, mining hardware and other assets to use for their cashflow and business expenses while waiting for the market to improve again. This bear market might be overestimated and in reality it might end sooner than speculated.

Nice, article, very informative.
Now I know another analytics platform I can safely ignore for their research!
So their data is a graph of bitcoin price and some... made-up stuff.
Everyone was shooting that the average for keeping mining profitable is 30k, we're down one thrid and look t the difficulty, a -1.5% budge down.

Every single of those idiots goes to google, grabs the average kwh price per country, grabs the hashing rate distribution from digiconomsit and they have a graph.
My average electricity cost for residential is 30 cents, I mine for 5 cents, and my gear has been paid off, so what's my actual cost of mining?
There are tons of miners mining at 2cents, tons who have already made ROI so for them is electricity vs income, nobody even bothers to listen to those, not even talking about going deeper, guys that can claim write-offs on taxes based on depreciation on their miners.


That could have been a nice graph but they had to go log, which when it comes to hashrate is just stupid, it makes the hashrate look almost flat when there are billion in equipment added in a year, worth more than everything that was previously mining in 10 times.

Anyhow, this is what matters:
https://bitinfocharts.com/comparison/bitcoin-mining_profitability.html#3m
We're not yet to the lowest in the last 3 years so probably there won't be any major drop unless we go again below 18k, which I doubt for at least some time.

Yeah but remember that the hashrate only actually drops if miners completely stop mining in the first place, but that would be catastrophic to their own profits.

You're unfortunately correct when it comes to thieves, but the same can't be said for the latter... To harness such energy, miners need to acquire certain pieces of equipment for their setup and they tend to cost a lot ^{[at first]}.

Regarding the difficulty adjustments that it happens roughly every two weeks, you have a point but that doesn't change the fact that miners are currently earning less when they try to convert their BTCitcoins into dollars.

As of now the next difficulty adjustment in about 5 days puts it at flat. So it does not look like any miners are shutting down. Or if some are shutting down as fast as they do others come online. If BTC stays at it's current price point or drops then we will have to see what happens in 20 days or so from now to the difficulty. At a guess a few of the edge cases might shut down smaller farms but for the most part since you have to buy & pay for the gear before you get it, it's better to mine at a loss and accumulate coins hoping for an increase in price then shutting it down and selling off the miners.

Just my view.

-Dave

You know.... Satoshi has built in mechanisms into the Bitcoin protocol to combat situations like this. It just happens that when the hashrate drop, the Bitcoin protocol will adjust the difficulty so that it will become easier to mine bitcoins. In affect, miners will then use less electricity to mine coins and it will stay profitable under conditions when there are lower prices.

https://stats.buybitcoinworldwide.com/hashrate-vs-price/  <=== I do not see a dramatic drop in the hashrate at the moment, so I guess a lot of miners are still mining with enough profit. Study the graph and you will see that the hashrate has climbed ..even when there was a big drop in the price. 

Unprofitable for who? For people who pay for their electricity? Might be true. However there are many people who get their electricity for free somehow. (thieves? solar energy?) In the end some miners may shut down them rigs but the network will never go off. There will always be somebody somewhere mining bitcoin. Heck, some people will probably mine it whether it is profitable or not just because they can.

A year ago as a result of China’s crackdown on cryptocurrency mining facilities, Bitcoin (BTC) mining became easier and more profitable. More than half of the hashrate, or the processing power of the Bitcoin network, dropped since the market peak in May 2021 as a result of the Chinese government’s mining restriction.

In spite of this, mining Bitcoin is no longer profitable for miners, according to data from the cryptocurrency analytics platform CryptoRank that was published on June 17.

This is because of the meltdown that has occurred in the cryptocurrency market, which has caused Bitcoin’s price to drop to a level that has not been seen in the past 18 months and has led the flagship digital asset to struggle to maintain support above the critical $20,000 level.

Source: https://finbold.com/bitcoin-mining-becomes-unprofitable-as-btc-price-falls-to-the-average-cost-of-mining/