Bitcoin’s mining industry is experiencing growing strain as the key measure of profitability, the hash price, slides toward levels that could push smaller operators offline and put pressure on mining equipment suppliers and service partners.
Hash price approaches risk level
According to the industry reportsthe hash price – the expected daily revenue per unit of computing power – is around $42 per PH/s today, down from over $62 per PH/si in July.
That decline towards the $40 mark is forcing some smaller and less efficient miners to scale back their rigs. Reports have revealed that with revenues falling this far, operators with thin margins can no longer cover electricity and maintenance bills.
Hardware manufacturers and hosting companies are affected. Orders for machinery have decreased, and any revenue associated with it Bitcoin has lost value after the market downturn in October.
Some manufacturers have started mining their own machines to compensate for weaker customer demand. Bitdeer and similar companies have been reported to expand their own mining operations to fill gaps in sales.
Hash price drops and approaches a critical level. Source: TheMinerMag
Miners Move Into AI Compute
High capital costs and steady increases in hashrate make it harder to run ASIC farms, especially after the April 2024 halving dropped the block reward to 3.125 BTC.
Back in 2009 the block reward was 50 BTC and people could mine with processors. Today, only specialized hardware makes mining profitable for most operators. That shift has pushed some companies to turn capacity into general computing for AI workloads.
Based on reports showing great deals trend is real. Cipher Mining signed a 15-year, $5.5 billion deal to supply computing power to Amazon Web Services in October.
IREN later agreed to provide GPU services to Microsoft in a contract worth $9.7 billion. These moves are meant to provide steady income as Bitcoin mining profits shrink.
Market downturn adds to stress for miners
Bitcoin’s price weakness has exacerbated the problem. The token briefly fell below $100,000, trading as much as 20% below its Oct. 6 high of over $126,000.
Analysts point to heavy selling by long-term holders: since the end of June, net sales by that group have topped 1 million bitcoin, according to Compass Point analyst Ed Engel.
A large liquidation of leveraged positions on October 10 also shook the market, knocking out support levels near $117,000 and $112,000.
Image: Dragos Condrea / Getty Images
Markus Thielen, founder and CEO of 10X Research, said the market’s failure to retake key levels indicates bearish conditions, and his firm argues that bitcoin could still fall further before a bottom emerges.
His team had previously predicted a drop to $100,000 and now says a buyable bottom could be “a few weeks away.”
Featured image from Pexels, chart from TradingView
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