Affected by multiple factors, including the Fed’s recent interest rate hike, almost all financial markets in the world have declined. As US stocks have gone down for 4 days in a row, the crypto market has also slumped. According to data from CoinGecko, as of May 12, 2022, the total market value of cryptocurrencies stood at less than $1.3 trillion, with $1.6 trillion evaporating in just 6 months. Bitcoin, the world’s largest cryptocurrency, fell below $30,000. The BTC price now stands at $28,751, which is at its lowest level since December 2020.
The mining difficulty of Bitcoin has surprisingly gone up during the price slump. According to BTC.com, the BTC difficulty has reached 31.25T, an increase of 4.89% and a record high. This major adjustment in mining difficulty makes it harder for miners to validate new blocks. Meanwhile, many mining rigs will soon reach/fall below the “shutdown price”.
What is the shutdown price?
As we know, running mining rigs consumes electricity, which comes at a certain cost. When the mining revenue fails to cover the electricity cost, miners will suffer losses if they choose to keep running their mining rigs. Plus, other operating expenses such as the cost of site maintenance have not even been included. Under such circumstances, miners have no choice but to shut down their mining rigs. Hence, the BTC price at which the income of Bitcoin mining fails to cover costs such as electricity is referred to as the shutdown price of mining rigs.
According to data on ViaBTC’s official website, as Bitcoin falls below $30,000, based on the current BTC difficulty of 31.25T and the electricity price of $0.05kWh, models including Avalon A911 ($27,084.63), Inno T1 ($27,510.31), Avalon A920 ($28,524.85) and Antminer S9 ($30,248.14) have all fallen below the shutdown price, and mining rigs like Inno T2, Antminer S9K, and Antminer S11 are also on the verge of their shutdown prices.
After the crypto craze cooled down, the BTC blockchain explorer showed that the BTC hashrate has not been much affected but slightly increased instead. Evidently, though the BTC price dropped below the shutdown price, many believers have not lost their faith. Data from TheBlock suggests that the total revenue recorded by Bitcoin miners in April stood at $1.16 billion, while that earned by Ethereum miners during the same month was $1.39 billion. During the first 10 days in May, Bitcoin miners earned $373 million, while Ethereum miners earned $450 million, indicating no sharp fall in the mining revenue of the two major cryptos.
Does mining during a crypto bear always lead to losses?
Mining cryptos during a crypto bear is not always counterproductive, and miners could profit as long as their mining rigs stay above the shutdown price. Meanwhile, miners can also join ViaBTC Pool and apply for the Ambassador Program by referring ViaBTC to their friends. ViaBTC Ambassadors can get 20% referral commissions on fees as long as they stay as Ambassadors.
Though payment methods offered by existing mining pools differ, most of them charge fees with a rate ranging from 2% to 4%. Let’s assume that Miner A provides an effective hashrate of 5,000TH/s and the PPS method he selected comes with a rate of 4%. The current BTC price stands at $27,384 and the BTC difficulty has reached 31.25T, which means that he needs to pay the mining pool a daily fee of $21.9. If you become a ViaBTC Ambassador and ask Miner A to join the pool, then you can earn $4.38 in referral commissions. Moreover, the more friends you invite, the higher the hashrate, and the more commissions you will get.
Finally, this is not the first “crypto winter”. The darkest hour is always that before the dawn. What miners can do now is to mine and hoard cryptos and wait for the next bull.
