Crypto winter has hurt the entire crypto industry. It has already led to Terra’s collapse, several crypto exchanges’ closure, and the dismissal of a considerable number of specialists. It also had a significant impact on the miners. According to some reports, their profits have fallen by more than 26% since March, and some large farms have closed, as they ceased to be profitable amid rising electricity prices.
The main problems of miners
Today we want to talk about the problems miners face in the US, but it is worth noting that a similar situation is now observed worldwide.
The Texas Blockchain Association has announced a shutdown of bitcoin mining facilities. It is because, on July 10, the state government urged the residents and businesses of the state to reduce their electricity consumption to prevent an energy crisis in the region. According to some reports, shortly, the percentage of electricity consumption will exceed generation, which will inevitably lead to big problems.
Problems with the amount of electricity are associated with abnormal heat in the region.
Disabling such a crypto farm will save more than 1% of the total electricity consumption in the state.
Core Scientific has confirmed that it has shut down all mining power in Texas, which is 15% of the company’s total mining power. It is noted that this works in 6 different regions of the country, so it will continue to work as usual.
Most often, large crypto farms choose Bitcoin for mining. Although it is the most difficult to mine, it used to be the most profitable, especially when Bitcoin was at its peak price of $68k. Now the value of this asset has dropped to record highs, which has led to a sharp drop in earnings.
As of June 11, the Bitcoin hash rate dropped to 199 EH/s after a high of 231 EH/s a month ago. Every day it becomes more difficult to mine cryptocurrencies, but the size of dividends is falling. It leads some miners with a small amount of mining to abandon the idea entirely because they find it unprofitable.
According to some reports, miners earned 26% less in June. Their earnings amounted to 668 million USD. Research shows that this figure has been falling rapidly since March of this year and is likely to continue to decline further.
How does this threaten the crypto industry, and how to change it?
The situation can change only when the price of bitcoin stops falling and starts to rise again. Experts argue in their forecasts. Some say that the value of this asset will reach 10,000 USD in a few months, while others predict a sharp increase to 100,000 USD this winter.
If we analyze the development of bitcoin since its inception, then such a sharp drop in value has already happened. Then it took the asset about three years to return to its previous positions and even get robust growth. It is expected that in the current situation, it should take less time, as the number of owners (both large and small) has increased dramatically, and many large corporations, such as Binance, have expressed their willingness to support this currency.
It is worth saying that at this stage, a decrease in the number of minings may slightly stabilize the situation on the market. The price decrease is because supply is now much more significant than demand, leading to a greater cost decrease.
However, it is impossible to completely abandon mining, as this can disrupt the operation of various blockchains, making it much more difficult or even impossible to complete transactions. The miners sought to support this ecosystem and ensure its normal functioning.