With rising energy costs and cryptocurrency prices declining, bitcoin miners are finding it difficult to remain profitable, putting several significant businesses in danger of going out of business.
As mining profitability declines, bitcoin miners, a majority chunk of the token’s owners—are expected to sell more of their holdings. According to Bitinfo data, the average mining profitability for one transaction hash is about 10 cents per day, which is very low.
The profitability of mining has been significantly hurt this year by a dramatic decline in Bitcoin values and rising energy prices.
Major miners were observed selling off their holdings in May and June of this year, but continued price and profitability problems may lead to additional offloading.
However, considering that miners are typically the last to sell during a bear market, their recent selling spree might be a sign that the largest cryptocurrency in the world is nearing a bottom.
Given that the majority of miners will be selling tokens at significantly lower rates, the price of bitcoin will probably decline further before bottoming out.
Several traders are cautious to acquire due to concerns around the bankruptcy of cryptocurrency lender Celsius and hedge fund Three Arrows Capital.
ETH Miners are Not Spared Either
As Ethereum’s price fell during the recent crypto crash, miners on the Ethereum network saw their profitability fall.
As miners were forced to shut down, some of the biggest cryptocurrency networks saw a reduction in energy use of up to 50%. Despite the decline in mining profitability, the price of Ethereum is still rising.
The Ethereum network used 93.98 TW/h of electricity on May 23, and afterwards there was a rapid reduction. In the previous month, the network’s electricity consumption dropped by close to 50%, to 47.43 TW/h.