The Bitcoin mining sector has come under increasing pressure as hash prices, a key industry profitability indicator, have fallen to levels that could force small operators offline and strain the broader supply chain.
The hash price, which measures the expected daily return per unit of computing power, is currently around $42 per petahash per second (PH/s). The metric has been steadily declining since surpassing $62 per PH/s in July.
According to TheMinerMag, the rise to the $40 level is causing Bitcoin mining operations, which already have razor-thin profit margins, to consider shutting down their rigs.
The decline in hash prices has also affected the mining supply chain. According to the report, the hardware provider has seen fewer orders from struggling miners, and its BTC-denominated sales have also been hit by falling prices after the October market crash.
Hash prices have plummeted and are approaching crisis levels. sauce: the minor mug
Mining hardware manufacturers such as Bitdeer are turning to self-mining to make up for the lack of demand for mining machines.
As Bitcoin mining becomes more competitive, with razor-thin profit margins, high capital expenditures for hardware upgrades, and rising energy costs, many Bitcoin miners are pivoting to AI and high-performance computing data centers to generate revenue.
Miners pivot to AI as hashrate continues to increase
Bitcoin miners are guaranteed a 50% reduction in rewards every four years during Bitcoin halving, as the computing power and power required to mine blocks continues to increase.
The hash rate of the Bitcoin network continues to rise, exceeding 1 zetahash per second (ZH/s). sauce: cryptoquant
In 2009, the first block reward for successfully mining a block was 50 BTC, and Node Runners used personal computer CPUs to mine BTC.
After the April 2024 halving, the BTC block reward decreased to 3.125 BTC, and mining BTC currently requires specialized mining hardware known as an application-specific integrated circuit (ASIC).
These difficult economic conditions have forced many miners to diversify into adjacent AI datacenter and computing businesses, generating billions of dollars in revenue for those that have made the transition.
In October, Cipher Mining signed a $5.5 billion deal with tech giant Amazon to provide computing power to Amazon Web Services for 15 years.
Bitcoin mining company IREN signed a similar deal with Microsoft in November to provide GPU computing services worth $9.7 billion.
