20 Jun 2022

The profitability of bitcoin mining is plummeting

The cash flows of bitcoin mining keep dropping to new lows, and Antminer S9 is now in negative territory.
Source: Hashrate Index, CoinMetrics
The extreme mining profitability in November led to massive investments in new production capacity. All these new ASICs coming online have resulted in a growing hashrate while the bitcoin price has fallen.The increasing hashrate and the falling bitcoin price have pushed the mining profitability down to levels not seen since 2020. At $40 per MWh, the energy-efficient Antminer S19 currently yields a cash flow per bitcoin of $13k, corresponding to an 80% decline from the November 2021 peak. The Antminer S9, our proxy for old generation machines, is now cash-flow negative.The public miners have very low production costs since they have access to cheap electricity and use new, energy-efficient machines. This means that they are not at risk of shutting off their machines, but the lower cash flows will give them trouble securing financing, which will likely put a final nail in the coffin of their lofty expansion plans. Now it’s about survival.The low cash flows mean miners must increasingly sell their bitcoin to pay financing costs. We have already witnessed a significant increase in bitcoin sales from public miners.
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