In late 2021, miners were the toast of the town with a surefire way to profit, hook powerful computers up to cheap power, crack fiendish maths puzzles and sell newly minted coins on the booming market.
According to the data fromBlockchain.com, global revenue from mining of digital currency has dropped to $17.2 million a day, as a result of the global energy crisis, down about 72% from last November when miners were racking up $62 million a day.
Joe Burnett, head analyst at Blockware Solutions said that miners were watching the price of bitcoins have fallen, mining difficulty has risen and energy prices have gone up.
Some players who bought expensive mining machines or rigs are under pressure due to rising prices of bitcoins to recoup their investment.
Since August, the price of digital currency hasn't broken above $25,000, despite November's all-time high of $69,000.
As more miners come online, the process of solving puzzles to mine token has become more difficult. This means they have to consume more computing power to increase operating costs, especially for those without long-term power pricing agreements.
Since July, the profit for a terahash per second of computing power has gone between $0.119 and $0.070 a day, down from $0.45 in November last year and around its lowest level for two years.
The grim state of affairs could be here to stay, as Luxor's Hashrate Index, which measures mining revenue potential, has fallen almost 70% this year.
It's been a painful experience for miners.
The shares of Marathon Digital, RiotBlockchain and ValkyrieBitcoin Miners ETF have fallen more than 60% this year, while Compute North filed for bankruptcy last week.
Mining is a long-term proposition - the last bitcoin is expected to be mined in 2140, more than a century away - and there is a spy opportunity in the gloom.
When the market is low, the same mining rigs that went for $10,000 earlier this year, you can get that for 50% to 75% off right now, said William Szamosszegi, CEO of Sazmining Inc., who is planning to open a renewable-energy powered mining operation.
Many miners are cutting back on buying rigs, forcing makers to cut prices.
In January, the popular S 19 J Pro rig sold for $10,100 on average, but now sells for $3,200, analysts at Luxor said. Prices for bulk orders of some mining machines had fallen by 10% in the past week.
Chris Kline, co-founder ofBitcoin IRA, said miners would have to focus on energy efficiency to bring costs down and avoid any repercussions from climate change related regulations.
He said miners will try to stay afloat regardless of market conditions, from managing their balance sheet, processing units and energy costs.