what you need to know about the current crisis

Bitcoin mining is going through a major crisis. Indeed, even if the sector is accustomed to the fall in the price of Bitcoin, the current situation is complex. First, this is the first time that the Bitcoin price drops below $20,000 since 2020. In other words, all Bitcoin mining factories that have opened since that date are experiencing their first crisis. Let’s see what the ingredients are, and what the consequences of a bitcoin mining crisis.

The fall of Bitcoin compromises the economic model of miners

Bitcoin mining is done with computers that are constantly running to solve complex calculations and discover new Bitcoins. Nevertheless, at most number of bitcoins discovered is important, the more the discovery of new Bitcoins is complex. With time, BTC miner therefore requires more and more energy, and therefore costs more and more.

Until then, Bitcoin mining was very profitable thanks to the continuous rise in the price of the best known cryptocurrency. However, a fall in the price calls into question this cost/benefit balance. Second, factories have more and more minimized costs. Because countries are increasingly regulating the mining of Bitcoins. For instance, China has banned mining, when the United States set strict rules. Until then, the mining factories easily absorbed these new costs thanks to the rise in the price. But the fall really changes everything.

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The price of energy complicates the mining of Bitcoin

New additional constraint that is added for Bitcoin mining factories: the rise in electricity prices. On a planetary scale, they have more than doubled over one year. Or, not all mining plants have a long-term supply contract, photovoltaic self-production or recovery of surplus product.

The financial balance of bitcoin farms is precarious. And the situation could lead to the shutdown of certain factories.

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