The Bitcoin mining industry is feeling tense as the hash price, a key profitability indicator, falls toward levels that could drive small operators offline and put pressure on mining equipment providers and service partners.
Hash price approaches dangerous level
According to industry reports, hash prices (expected daily revenue per unit of computing power) are now around $42 per PH/s, down from more than $62 per PH/s in July.
The drop towards the $40 level is forcing some smaller, less efficient miners to consider powering down their rigs. According to the report, when revenues fall this low, operators with thin profit margins will no longer be able to cover their electricity and maintenance costs.
Hardware manufacturers and hosting companies have also been affected. Machine orders have slowed, and the income associated with Bitcoin has lost value since the October market decline.
Some manufacturers have started mining with their own machines to compensate for weak customer demand. Bitdeer and similar companies are reportedly expanding their self-mining operations to fill the revenue gap.
Hash price drops and approaches a critical level. Source: TheMinerMag
Miners move to AI computing
High cost of capital and steady increase in hashrate make it difficult to operate an ASIC farm, especially after the April 2024 halving that reduced the block reward to 3.125 BTC.
Back in 2009, the block reward was 50 BTC and people could mine using their CPU. Currently, mining is only possible with specialized hardware for most operators. This shift has led some companies to convert capacity to general compute for AI workloads.
Based on the report, the large trades show that the trend is real. Cipher Mining signed a $5.5 billion, 15-year contract in October to supply computing power to Amazon Web Services.
IREN later agreed to provide GPU services to Microsoft in a deal worth $9.7 billion. These moves are aimed at providing stable income even as Bitcoin mining profits shrink.
Market downturn increases stress for miners
Bitcoin’s slumping price is exacerbating the problem. The token briefly fell below $100,000, trading 20% below its October 6 high of $126,000.
Analysts have pointed to heavy selling by long-term holders, with the group’s net sales exceeding 1 million Bitcoin since late June, according to Compass Point analyst Ed Engel.
A large liquidation of leveraged positions on October 10 also shook the market, breaking support levels around $117,000 and $112,000.
Image: Dragos Condrea / Getty Images
Markus Thielen, founder and CEO of 10X Research, said the market’s failure to recover key levels suggests a bearish situation, and his company argues that Bitcoin could fall further before a bottom appears.
His team had previously predicted a drop to $100,000, but now says the lowest price at which it can buy could be “weeks away.”
Featured images from Pexels, charts from TradingView
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