Bitcoin mining hardware. Image: Getty Images

Bitcoin mining difficulty drops more than 7% as cash crisis looms for miners

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The Bitcoin mining difficulty level adjusted down 7.32% on Tuesday in Asia, the sharpest fall since July 2021, with many companies in the industry facing a cash shortage as energy costs rise and Bitcoin prices have been pushed even lower following the collapse of the FTX exchange last month.

Bitcoin mining difficulty changes roughly every two weeks, and it correlates with changes in how much computing power is used for mining bitcoin blocks to be rewarded with Bitcoins.

Bitcoin’s seven-day average hashrate, a measure of computational power used, was around 251.1 exahashes per second on Monday, down from a seven-day average of 261.3 exahashes on Nov. 21, Blockchain.com data showed.

The mining difficulty reading came in at 34.24 trillion as of block height 766,080 in Tuesday’s biweekly adjustment, after reaching an all-time high on Nov. 21, according to data from BTC.com.

Bitcoin reached an all time high of more than US$67,000 in November 2021, but has since fallen 75% to trade at around US$17,000 on Tuesday in Asia, according to data from CoinMarketCap.

Adrian Wang, chief executive officer of Metalpha, a Hong Kong-headquartered digital asset wealth management firm, told Forkast in an interview last month that Bitcoin mining businesses require large capital expenditure, and need “lots of investments.”

“[During] last year’s price peak, a lot of people expanded and took leverage based on the assumption that the Bitcoin price [was] over US$60,000,” Wang said. “Now it’s around US$16,000. The assumptions are so different.”

Core Scientific said last month in its third-quarter report that its “existing cash resources will be depleted by the end of 2022 or sooner,” after the company warned of bankruptcy risks in October.

The Nasdaq-listed mining firm said that its net loss reached US$1.7 billion this year through the end of September, compared to a loss of US$13,194 in the same period last year.

U.S.-based Compute North filed for Chapter 11 bankruptcy in September, and is looking to sell its mining sites. Crypto mining and staking firm Foundry Digital LLC said last month that it plans to acquire two turnkey mining facilities from Compute North.

London-listed miner Argo Blockchain Plc and Nasdaq-listed Bitcoin miners Iris Energy Ltd. and Greenidge Generation Holdings Inc. have also said they are facing cash shortages.



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