As Bitcoin (BTC) slumps below the $25,000 price level, several miners of the token face a potential shut down due to dwindling profitability.
Bitcoin slumped over 12% in the last 24 hours and is now struggling to stay above $24,000. Concerns over rising inflation and interest rate hikes by the Federal Reserve have broadly driven selling in the token.
The decline in prices is now testing the profitability of mining Bitcoin. Old mining machines such as S11 and Avalon A9 face a potential shutdown due to dwindling profitability.
Data from f2pool shows that Antminer S11 yields $2.03 at a cost of $2.07, which is mining the token at a loss. Several Avalaon A9 models are also seeing similar gaps in profitability.
Still, newer machines such as S19 and M30 still seem to have a long run before reaching their respective shutdown prices.
Why are some miners shutting down?
Given the drop in Bitcoin prices, the profitability to mine is gradually decreasing. Even as some miners are winding down block production, data from Blockchain.com shows Bitcoin mining difficulty is near record highs.
This means that mining machines will take up more electricity to create blocks, hence increasing their input costs.
But conversely, Bitcoin mining profitability is at its lowest since Jan 2021. Glassnode data shows that Bitcoin mining revenue slumped 56% by May.
Difficult Time For Miners
But a crash in prices isn’t the only difficulty faced by Bitcoin miners. Regulators are looking to outlaw the practice due to its high energy requirements, and potential carbon footprint.
Recently the New York state declared a ban on crypto mining it the state. The United States of America accounts for about 42.7% of global mining activity.
Several major countries, including China and Kazakhstan, have outlawed mining due to the pressure it places on electricity grids.
Several Bitcoin miners have also taken to offloading their holdings to maintain their cash flow and operations.
The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.
