Bitcoin miner hashprice drops to historic lows

Bitcoin miners are in deep trouble this week. Just when they thought things couldn’t get worse, they did. 

After a massive surge in mining difficulty last Wednesday, Bitcoin’s price took a nosedive, dropping a staggering $10,000 in just one day. 

This crash dragged the hashprice—the money miners make per unit of hashrate—to a historic low, dipping below $36 per PH/s.

Sure, Bitcoin’s price has since bounced back a bit after briefly dipping under $50,000, but the hashprice is still stuck around $40 per PH/s. That’s a solid 10% drop from the previous low we saw in early July. 

The seven-day moving average for hashrate has been sliding since last week, and unless the next difficulty adjustment offers some relief (which we won’t see until next week), things could stay rough for a while.

Crypto miners feeling the squeeze

Right now, it’s not easy being a Bitcoin miner, especially if your electricity costs aren’t rock bottom. For instance, Bitmain has 4.1 EH/s worth of Antminer S19XPs running at Core Scientific’s facilities.

The hosting rate? A steep $0.0745 per kWh. This means their daily hashcost is about $39 per PH/s, just scraping by with the current hashprice. Basically, they’re barely breaking even.

Even big mining companies that usually have the upper hand are struggling. Companies like Marathon, Core Scientific, and Riot—some of the biggest names in public mining—are finding it nearly impossible to turn a profit at these hashprice levels, especially before they factor in depreciation and taxes.

In their recent Q2 financial reports, these companies have laid out the grim reality. According to TheMinerMag’s estimates, their total hash costs in Q2 were through the roof, pushing their all-in mining costs for July over $60,000 per Bitcoin. Ouch.

Despite the brutal hashprice, Marathon and Riot are playing the long game. They’re holding onto all the Bitcoin they mine, hoping for better days ahead. Maybe it’s a strategy, or maybe they just don’t have many other options.

Hanging on despite the odds

So far this year, Marathon and Riot have raised more than $1.5 billion in cash through stock sales, according to TheMinerMag. That’s a big chunk of change that could help them survive the current hashprice slump. 

But they’re not in the clear yet. Both companies have massive spending commitments on the horizon. In the first half of 2024 alone, they poured over $1 billion into power, plants, and equipment.

Core Scientific, on the other hand, has taken a different route. They’re selling off every Bitcoin they mine. It’s not exactly a goldmine in terms of profit, but it’s helping them keep the lights on and pay off debt. 

Speaking of debt, they managed to wipe out $260 million of it back in July, just in the nick of time. Core is also doubling down on high-performance computing (HPC) and AI, with 382 MW of hosting capacity dedicated to CoreWeave.

Bitcoin’s price has made a comeback, climbing back up to around $59,300 at press time. That’s an 8% bump after the scary drop below $50,000 earlier this week. 

The rebound is a bit of good news after a rough period that saw the crypto market hit by broader economic issues, like rising U.S. bond yields and fears of a global recession.

But don’t break out the champagne just yet. 

Analysts, including those at JPMorgan, are still sounding the alarm. They’ve pointed out that while some good news might already be priced in, the overall market vibe is still pretty shaky due to ongoing economic uncertainties. 

Plus, the rest of the crypto market is expected to see more ups and downs throughout August. 

Institutional investors, who usually throw their weight around in the market, are likely to keep their focus on stocks rather than getting back into crypto anytime soon.