The low profitability of BTC mining is still a mystery to many crypto fanatics and investors. No wonder, given the ever-increasing energy costs. Moreover, the bear market is also having a significant impact on Bitcoin’s mining problems.
At this point, it is unlikely that reasonable profits will be made from mining Bitcoin. However, this fact does not mean that BTC mining is fruitless. On the contrary, miners would be fine provided they use the right tools in the mining process.
BTC mining difficulty drops
The BTC mining sector is going through a recession. Bitcoin mining difficulty fell to about 7.32% on Tuesday. This occurrence is not far-fetched from the plummeting prices of digital tokens, which have also reduced miners’ profits.
According to data from the BTC.com mining pool, the system has made its most significant adjustment since July 2021, with a block height of 766,080. The adjustment corresponded to July 2021, when many miners withdrew from the system. This motion stemmed from China’s ban on digital currencies at the time.
According to the BTC mining process, the computing power or hashrate when mining determines the outcome of mining problems. This system is essential to stabilize the time it takes to reach one block of Bitcoin. As the number of miners increases, so does the difficulty of mining.
In addition to the reduced difficulty of mining, BTC miners are also seeing a steady increase in energy costs and electricity rates. These events also had a negative impact on miners’ earnings in recent months.
However, miners are not the only victims of Bitcoin’s stubbornly falling price. Recognized producers such as Argo Blockchain (ARBK) and Core Scientific (CORZ) are aiming to survive bearish market liquidity pressures. Compute North, on the other hand, saw Chapter 11 bankruptcy as the only way out.
The company experienced a breakthrough after purchasing new and efficient equipment a few months ago. During that time they got new miners who brought different projects to success.
Also, there was a notable increase in difficulty and hashrate between August and November 2021, when the last positive adjustment was made.
Crypto Winter becomes the main influence
The company had hoped that success would continue, but was driven by the headwinds of the crypto winter of 2022. This was the beginning of the hashrate downturn. Nevertheless, it shows higher values than those shown immediately after China’s break with the crypto sector.
Miners are now trying to get a lower electricity price because of the steady decline in profits. But according to a Luxor analyst Jaran Mellerud, miners are still paying between $0.07 and $0.08/kWh for an average electricity price of $0.05/kWh. Meanwhile, the price of BTC is at $16,961. The token shows a 24-hour price change of -0.46%.
Featured image from Pixabay, chart from TradingView.com