Three Bitcoin Mining Downgrades in a Row – Bitcoin Magazine
Below is a direct excerpt from Marty’s Bent Issue #1240: “Another downward difficulty adjustment is on the way.” Sign up for the newsletter here.Bit
ASICs that heat a greenhouse
via Clark Moody’s Dashboard
Don’t look now, but July 21, 2022 should bring a difficulty downgrade of around 5%, which would be the third downgrade in a row and the fourth over the last five difficulty eras. Marks the longest streak of downgrades since this time in 2021, when miners were forced to disconnect and migrate out of China as quickly as possible.
With the global macro outlook deteriorating during 2022 and the bitcoin market experiencing a mass bearish event in the wake of Ponzi blasts with many lenders falling victim to a particular Ponzi scheme – 3 Arrows Capital – which was completely wiped out and brought bitcoin- price down with them, bitcoin miners have felt the pain. The downward pressure on the price of bitcoin has pushed the hashish price down with it; hit a low of $0.08 TH/day exactly one week ago.
via Brain’s Insights
The hash price has since recovered to $0.10 TH/day with the recent pump in price, but it’s pretty clear that many players in the mining industry are feeling the pain. The two indicators I look at to measure the pain are listed miners’ bitcoin taxes – holding or selling – and the price of ASICs. Over the past two months, listed miners have sold tens of thousands of bitcoins to service debt and keep a runway for their businesses. At the same time, the price of ASICs measured in dollars per terahash has completely cratered, reaching levels not seen since late 2020.
I personally see the best machines selling for $25-$30/TH this week. For context, the same caliber machines were selling for well over $100/TH right before the China ban and right around $100/TH in December 2022 when the dust created by the China ban settled. The price of ASICs is falling rapidly as miners who prefer not to sell bitcoin (or have none to sell in the first place) decide to sell their machines rather than cover expenses and debt obligations. There are currently tens of thousands of machines that haven’t even been opened yet, sitting in warehouses across the United States. Some listed miners used their access to the capital markets to secure massive ASIC futures orders that have been delivered this year. Some of these miners have had trouble finding the necessary capacity to connect all these machines in time. With mining stocks getting absolutely hammered along with the price of bitcoin, it is proving too costly to hold onto these ASICs, which are also depreciating.
On top of this, miners with relatively high electricity prices have seen their operations become unprofitable. If they are unable to sustain losses in subsequent months, they will shut down and liquidate their assets (ASIC). Hence the extremely low ASIC price that the market is seeing right now.
I expect the price of ASICs to continue to fall through the summer as markets continue to thin and bitcoin hangs in the low 20,000 range. These fire sales by desperate miners and producers present an incredible opportunity for anyone in the mining industry with significant capital and execution ability. Your Uncle Marty thinks we will look back on late summer 2022 as one of the best times in bitcoin history to get into mining. If individuals or companies pick up ASICs at these levels, are able to lock in reasonable electricity prices, plug in their machines quickly and the price of bitcoin recovers at some point later this year, how long will it take for these machines to achieving returns will be very short.
We’ll keep you freaks posted on the situation as it unfolds. Until then, enjoy the difficulty level down! A beautiful reminder that Bitcoin works as designed and that you’re likely to stack more rate if you’re a miner who’s up and running and hashing right now.
