Bitcoin Miners Face Crisis as Hash Rate Drops and Revenues Plummet

Bitcoin Miners Under Pressure Due to High Costs and Decreasing Revenues

This week, the Bitcoin network's hash rate experienced a significant decline of twelve percent, marking the largest drop since the Chinese mining ban a few years ago. Such a drastic decrease is often interpreted as a sign of miner capitulation, where miners shut down their machines due to high operational costs or unprofitability.

According to data from CryptoQuant, the overall hash rate has been on a downward trend since November, primarily due to extreme winter weather conditions in the United States, where many large miners operate. Power outages and grid restrictions forced miners to temporarily shut down their equipment, resulting in a hash rate drop to approximately 970 exahashes per second, the lowest level in months.

"The financial pressure is rapidly increasing. The profitability of miners is at its lowest point since late 2024, despite adjustments that have made mining technically somewhat easier."

The impact on revenues has been stark, with daily earnings from Bitcoin mining plummeting from around $45 million to $28 million in a short period. Additionally, major publicly traded miners saw their combined output drop from 77 Bitcoin per day to just 28 Bitcoin.

Simultaneously, the cryptocurrency market faced a severe blow, with Bitcoin, Ethereum, and XRP all experiencing significant losses, particularly Bitcoin, which fell by over eleven percent. This market correction led to the liquidation of more than $2 billion in positions, heavily affecting traders who had bet on rising prices.

Data from Coinglass indicates that long positions were particularly hard hit, with Ethereum witnessing the largest liquidations. Furthermore, Bitcoin and Ethereum exchange-traded funds saw substantial outflows, as investors withdrew billions, adding further pressure to the market.

This challenging combination of factors is placing miners under considerable strain. With mining becoming increasingly difficult and revenues declining due to lower prices, many miners are struggling to remain profitable while their operational costs remain unchanged. However, history suggests that such phases are often temporary, and the exit of weaker miners could ultimately lead to a stronger and more stable Bitcoin network in the long run.

Key Takeaways:

• Bitcoin's hash rate dropped by 12%, the largest decline since the Chinese mining ban.
• Daily earnings from Bitcoin mining fell from $45 million to $28 million.
• Major miners' output decreased from 77 Bitcoin per day to 28 Bitcoin.
• Bitcoin's price dropped over 11%, leading to $2 billion in liquidations.

Sources:

• Bitcoin-Miner unter Druck durch hohe Kosten und sinkende Erträge