F2Pool Data Highlights Mining Challenges Amid Market Downturn
As Bitcoin (BTC) prices drop to $54,000, only five mining rigs are profitable for their operators, according to data from mining giant F2Pool. This market condition could signal a “local bottom,” impacting the profitability and operations of Bitcoin miners.
Current Mining Profitability
At an electricity rate of $0.08 per kilowatt-hour (kWh), mining rigs less efficient than 23 watts per terahash (W/T) are now operating at a loss, as indicated by F2Pool’s graph released on Friday. A kWh measures the energy usage of electrical devices, which is crucial for calculating mining costs.
F2Pool’s analysis shows that only four Antminer rigs and one Avalon rig remain profitable as long as Bitcoin prices stay above $53,100. All other mining equipment is currently more costly to operate than the rewards they generate. Miners continuously sell their Bitcoin rewards to cover these operational costs, which are substantial. In recent years, several miners have even filed for bankruptcy due to these financial pressures.
⛏️With #Bitcoin trading below $58k, what is the current profitability for mining?
At a rate of $0.08/kWh, ASICs less efficient than 23 W/T operate at a loss.
For more details on mainstream miners, please refer to the table below. pic.twitter.com/hJS1lsVnmK
ADVERTISING— f2pool 🐟 (@f2pool_official) July 4, 2024
Market Impact and Miner Behavior
In June, miners were a significant source of Bitcoin selling pressure, offloading over $1 billion worth of BTC within two weeks as prices fluctuated between $65,000 and $70,000. This continuous selling is necessary to maintain their operations but can exacerbate market downturns.
However, some market analysts suggest that the current unprofitability of miners might indicate a local bottom, reducing selling pressure. Dovey Wan, a partner at crypto fund Primitive Crypto, stated on X, “Bitcoin miners are an inch away from capitulation. S19 break even at $52,000. This is a perfect setup for a local bottom.”
Long-Term Implications for Miners
The current scenario underscores the volatility and risk inherent in Bitcoin mining. As prices drop, miners face increased financial strain, leading to potential market stabilization if many decide to cease operations temporarily. The profitability of mining rigs is closely tied to Bitcoin’s market performance, making the industry highly sensitive to price fluctuations.
Future Outlook
The situation remains precarious for Bitcoin miners, with only the most efficient rigs able to sustain profitability at current prices. Should Bitcoin’s value continue to fall, more miners may reach the brink of capitulation, potentially creating buying opportunities for investors and a more stable market environment.
FAQ
How many mining rigs are currently profitable with Bitcoin at $54,000?
According to F2Pool, only five mining rigs are profitable at the current price of $54,000.
What electricity rate is used to determine mining profitability?
The profitability calculations are based on an electricity rate of $0.08 per kilowatt-hour (kWh).
Which mining rigs are still profitable?
Four Antminer rigs and one Avalon rig remain profitable as long as Bitcoin prices are above $53,100.
Why do miners sell their Bitcoin rewards?
Miners sell their Bitcoin rewards to cover operational costs, which are intensive and include electricity and maintenance expenses.
How has the recent Bitcoin price drop affected the market?
The price drop has increased selling pressure from miners, but some analysts believe it could indicate a local bottom, reducing future selling pressure and stabilizing the market.
What is the significance of a “local bottom” in the cryptocurrency market?
A local bottom suggests that prices have reached a temporary low point, which might reduce selling pressure and potentially lead to a market rebound.
