The crypto mining sector is falling apart, and miners are being hit from all angles at the time of writing.
Crypto Mining Is Beginning to Crash and Burn
To be fair, the prices of many mainstream digital assets – such as bitcoin, the world’s number one digital currency by market cap – have remained relatively still over the past few weeks. While things are nowhere near as solid as they were a year ago, volatility has remained relatively low in the autumn and winter months compared to where they were in the summer. Bitcoin continues to hover at around $20K for the most part, so it’s not really prices that are hurting miners in the long run.
However, while prices for digital assets are remaining somewhat still, the same cannot be said for energy prices, which continue to spike in recent months thanks to ongoing inflation. The prices of electricity have traveled through the roof over the past half a year, and miners are really starting to struggle to keep their businesses open. Many claim they are lucky if they are simply able to break even each month.
Christopher Perceptions – founder of Percept Form and CEO of No Code Clarity (both of which are web3 or hashing businesses) – claimed in a recent interview that there are several factors contributing to the fall of mining in recent weeks, though rising electricity rates appear to be the main culprits. He said:
There are a lot of different issues in motion. Obviously, the global recession is looming, on top of inflation and rising prices of electricity… If the electricity price is high, it’s harder to make a profit.
Nick Hansen – CEO of crypto mining firm Luxor – also threw his two cents into the mix, commenting:
Miners are struggling for a multitude of reasons, right now. We’re seeing historically low hash prices, which means that miner revenues are at all-time lows.
Keeping the Space Clean
In addition, it’s been very difficult to adhere to what appears to be a growing desire for clean energy sources in the crypto mining industry. There have been many reports published over the years claiming that bitcoin and crypto mining projects utilize more energy than most developing nations. These reports say the damage the industry is doing to the planet will soon be irreversible, and our children and our children’s children will likely bear the brunt of our lagging concern.
These statements are still open for debate, though it doesn’t help when they’re being supported by industry heads like Elon Musk, who in early 2021, decided that all Tesla purchases could be completed with bitcoin. Things seemed solid at first, though the statement was rescinded just a few short weeks later as Musk said he couldn’t promote bitcoin unless miners were more eager to utilize green energy.
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