Topic: [2022-06-28] Bitcoin mining revenue mirrors 2021 lows, right before BTC breached (Read 475 times)

@SFR10. I reckon in these type of circumstances CZ might be more fair than usual. Binance is a service in the cryptospace that cannot afford bitcoin to fail because if it fails, everyone will know the real definition of cryptowinter hehehe. Yes there might be a reason to profit for CZ, however, it might also something quite similar to an equitable transaction for everyone involved.

It does look like a bailout, but if the situation doesn't improve "significantly" in favor of miners ^{[within the next 18 to 24 months]}, then they'll be in a deeper hole while CZ and other providers continuously get the most out of the situation!

Yes, he presently telling everyone that there will be no problems for the most efficien of miners with the latest hardware and the cheapest source of electricity. However, after reading some news articles of Poolin issuing IOUs and Jihan Wu creating a fund to buy assets from distressed miners, I cannot quite trust Wes Cummins statement.

CZ of Binance has recently created a $500 million fund to provide loans for distressed bitcoin miners. This appears to be very similar to a bail out.



Binance has launched a $500 million fund to provide loans to Bitcoin miners struggling to cope with difficult crypto-market conditions.

Binance Pool, the company's mining service, will provide loans for both private and publicly-listed Bitcoin miners — who will need to pledge security, in the form of physical or digital assets, to obtain loans with a duration of 18-24 months. Binance will charge interest rates between 5% and 10%.

The initiative comes as Bitcoin miners experienced a tough few months while the price of bitcoin declined. With low bitcoin prices, miners' revenues have declined sharply — with Compute North even filing for bankruptcy.

Bitcoin miners' revenue fell 16.2% to about $550.5 million last month — marking its fifth decline in the last six months, and the lowest total since November 2020, according to data from The Block Research.

Source https://www.theblock.co/post/177170/binance-launches-500-million-fund-to-provide-loans-to-bitcoin-miners

well lets hope the double bottom and the ATH of hashrate become major price movement even tho i dont know what the correlation between the price and this 

If I understood his point correctly ^{[latter part]}, he's basically saying if the value of Bitcoin is below $20k, it doesn't make sense to go out and buy a new mining rig that's more efficient than what you already have and I have to disagree with that part.
^{- If I was still mining up to this point and we were in the $10k range, I would've bought the latest or rather most efficient miner out there to replace my inefficient mining rig.}

It appears mining revenue for the most efficient of miners will break even only if bitcoin continues to go down on $10k, according to Wes Cummins the CEO of Applied Blockchain. I am not quite certain if he is really an expert on bitcoin mining, however, assuming that what he has said is true, bitcoin is presently very safe from the mining death spiral.



So if Bitcoin continues to go down, the most inefficient operators are going to go offline, the more efficient operators make more tokens from their hardware, so it’s a little bit self-correcting. But that’s kind of the levels. $10,000-ish right now, depending on your hardware or you electricity costs, is the variable break-even, and $20,000 is the break-even to buy new hardware, or even a little bit above that.

Source https://www.thestreet.com/video/price-bitcoin-not-worth-mining

There is a good news update for the bitcoin miners that might be having problems with their monthly cashflow or that might be in the beginning stages of bankruptcy. Jihan Wu and Bitdeer has created a cryptofund to buy their assets. I speculate that there will be more of this type of fund created to take advantage of these investment opportunities.



Chinese crypto billionaire Jihan Wu is setting up a $250 million fund to buy distressed assets from Bitcoin miners, as the industry reels from this year’s steep drop in digital-asset prices.

Wu’s Bitdeer Technologies Holding Co. plans to invest $50 million as part of a junior tranche, meaning the firm’s investment will be first at risk if the fund loses money. It aims to raise another $200 million from outside investors such as family offices, venture capital firms, alternative investment funds and other mining companies, a representative from Bitdeer told Bloomberg News.

With the industry in a slump, highly leveraged miners are selling assets such as mining rigs at a steep discount to better-capitalized peers. Prices for certain types of mining machines have dropped more than 50%. In one recent example, Bitcoin miner CleanSpark Inc acquired a mining Georgia mining facility as well as thousands of rigs from another miner, Mawson Infrastructure Group Inc.

“We can buy the cheaper machines and run them in our existing facilities with stable and cost-effective power power purchase agreements,” Bitdeer’s Kong said. “You’ll have the cash flow.”

Source https://www.bloomberg.com/news/articles/2022-09-27/crypto-tycoon-s-bitdeer-debuts-fund-targeting-distressed-miners

It appears we are witnessing the beginning of this mining pool having their own cashflow problems. We have argued about this before on what miners and mining pools should do. I argued for miners or mining pools to take loans for their expenses monthly. Poolin decided to issue IOUs hehehe. This might work if their holders will trust the issuers for the whole bear market. However, how can the founders of Poolin assure the holders that they are not insolvent?



Chinese bitcoin mining giant Poolin will hand out IOU tokens to those impacted by frozen withdrawals.  

The IOUs are ERC-20 tokens on Ethereum and meant to mitigate the effect of the withdrawal suspensions, Poolin said in a blog post.

"Our priority, for the time being, is to resume withdrawals of as many coins/tokens as possible," the company said.

The IOUs come a week after Poolin paused withdrawals amid a liquidity crisis resulting from increasing demands on withdrawals, The Block previously reported.

Read in full https://www.theblock.co/post/169629/crypto-miner-poolin-issues-ious-after-freezing-withdrawals

You have a point but unfortunately, we're not going to experience a deflationary period anytime soon ^{[it'll happen at some point in the year 2140]}.

Amen to that

Fortunately, it's not as bad as it seems at the moment ^{[the last three difficulty adjustments were on a positive scale, and the next one appears to be following a similar path]}.

@dansus021. However, has anyone considered that it might be different this time? We are witnessing the world changing where it began with the coronavirus pandemic which affected the global economy negatively and this was followed by Russia's invasion on Ukraine which the sanctions on Russia has caused supply shortages on energy and some commodities which also caused inflation. There are also some articles being published that rotating blackouts in America and Europe will begin.

if history repeated we gonna see ATH in three years the long winter would be here, but my analysis still could be wrong.

and right now the bitcoin mining revenue might seem quite unprofitable but the company like bitmain also keep it up with more efficient hardware as the crypto winter hit in 2018

I believe you are correct.  More uses for bitcoin, more people realizing that one does not have to get out of crypto and into fiat will all help.  The time to protect oneself is now.  If you wait, it will be too late.

When Covid hit, Central banks around the world printed enough fiat currency to prop up the economy.  They printed so much fiat currency that they caused inflation. Bitcoin's run up along with the other major markets was a result of that money flowing from the large institutions. The problem is that there was a lack of actual value being produced.

The central banks now have to deal with the inflation caused by printing valueless currency.  If they continue to print fiat currency to keep the economy from falling off a cliff we will experience hyper inflation.  Currently real inflation based on the way it used to be calculated is at over 15%.  This can not continue or the system will collapse.

What we are seeing is the result of higher interest rates and less currency being printed.  It is what the central banks have to do in order to keep inflation under control.

Bitcoin is the best money ever created.  What we need to see is Bitcoins adoption as money.  This will take the power to print fiat currency away from the central banks and limit the up and down cycles we currently experience.  Instead we will experience real economic changes in market conditions.

When Bitcoin is used as a money the value will naturally go up and stabilize based on people pricing goods in Bitcoin.  The reason that Bitcoin is so volatile is that Bitcoin is being priced in dollars and treated as an investment.  Bitcoin is not an investment.  It is a money.

We are focusing on getting businesses to accept bitcoin as payment so that consumers will start using it to buy goods and services.  This will resolve the issues that are causing it to be too volatile.

Another big issue that needs to be addressed is to not allow banks and card processors to steel value from merchants.  This gives them control of the market and we as consumers are paying them to take our control away.  We need peer-to-peer transactions.  Satoshi had it right.  If we eliminate the 3rd party from the transactions and make them trust less we will solve this problem and Bitcoin will increase in value based on people using it to purchase goods and services.

If one Satoshi is the equivalent of one US penny that would make one Bitcoin worth one million dollars.  The value of Bitcoin will go up as people start using it as a money and not as an investment.

If I am not mistaken, bitcoin has been very predictable for the last 2 pairs of bull and bear markets. 1st pair 2012 - 2013 was a bull market then followed by 2014 - 2015 bear market. 2nd pair 2016 - 2017 was bull market then also followed by 2018 - 2019 bear market. The present cycle is the 3rd pair with 2020 - 2021 bull market and with the next market being 2022 - 2023.

Also, leverage has been the fuel of bitcoin pumps and bubbles since 2017. Many influencers in bitcointalk.org have argued that there is no bubble and it has been very clear that they are wrong. I predict that they will be more acceptable of reality during the next bull market hehehe.

Exactly, it is completely unpredictable except over long periods:  if usage continues to grow - no matter what the use whether it be transactional or protector etc - and new supply follows the programmed curve, then the price will go up.  It is just that one can not predict anything over shorter timeframes.

@Kakmakr. Those mining death spiral articles were fud from mainstream and cryptonews media outlets hehe. The writers never had any intentions to make the correct prediction. They only wanted to create another clickbait article and get maximum hits for the day. They never mentioned the mining's adjustment between difficulty and price. They only assumed that miners will be bankrupt because price was falling.

One thing I have learned from Bitcoin price history is that it is not predictable at all. There are just too many factors that influence the price and trying to link Bitcoin mining to that, will eventually fail too. We saw several predictions linked to Bitcoin mining when the Bitcoin price took a 80% nose dive in 2020.. and most of them were wrong. 

We had periods of 3 years between a "crash" and a next "All-time-high" Bitcoin price spike.... so all this guess work is simply a waste of time. Just concentrate on increasing Bitcoin adoption ....and the Bull-run will happen on it's own. 

@cr1776. Is investing in shares of cloudmining hashrates good? I have read many bad reviews about it and it appears that it might be more profitable to use the bitcoins to invest if you know how to trade than use them to buy shares of hashrates. I speculate that only unprofitable miners who do not have enough on their monthly cashflow offer these shares.

Re compass mining, it sure sounds that way.  There are a lot of fly by night or fly by the seat of the pants folks who start something and then fail.  I'd put mtgox and celsius in those categories. 

I talked to some of the attorneys etc in Puerto Rico about the benefits for US citizens of being there and they were convinced celsius was legit and well run.  I questioned their other comments then and even more so after the last few weeks.  The cloud miners may be good, but there are a lot of opportunities to take the money and run.


 

That's a big if and judging by the market behavior in the past year alone, I highly doubt we're going to experience something similar in a few months ^{[I hope I'm wrong]}.

That's true for the majority of miners, but regarding those that keep or rather hodle whatever that they mine, it'd have a smaller impact ^{[apart from individual miners, there were also two companies that decided to not sell whatever that they mine, but I forgot their names]}.

Considering that they already had a poor track record in regards to punctual payments or even paying the bills at all, I'm not blaming the current dip for what happened to them recently ^{[it probably has something to do with poor management]}.

One certainly can hope that this is the bottom so that the people who bought in above this point will feel less pain sooner, but there are no guarantees.  I guess we'll know in a year or two.

The article also talks about compass mining getting cut off in Maine. 

Bitcoin (BTC) visiting the $20,000 range after one and a half years made mining — the most important job of the ecosystem — a costly affair. However, if history were to repeat itself, BTC investors may witness another epic bull run that previously helped Bitcoin reach an all-time high of $69,000.

Changes in Bitcoin prices directly impact the miners’ income, who earn fixed block rewards and transaction fees in BTC for running their mining operations. In June 2022, the total mining revenue dipped below the $20 million range, with Blockchain.com data recording the lowest dip of $14.401 million on June 17.As shown above, the recent dip in Bitcoin mining revenue was last seen one year back when the total value tanked to $13.065 million on June 27, 2021 — back when BTC traded at roughly $34,000. What followed after that was Bitcoin’s five-month-long epic bull run, which was supported by pro-crypto initiatives such as El Salvador’s BTC acceptance and crypto-friendly regulations across the globe.

Soruce: https://cointelegraph.com/news/bitcoin-mining-revenue-mirrors-2021-lows-right-before-btc-breached-69k