Bitcoin Miners Face a $2.8 Billion Nightmare and Lowest Revenues in a Month
Bitcoin Miners Face a $2.8 Billion Nightmare and Lowest Revenues in a Month
Five
companies lost $2.8 billion due to a sudden drop in Bitcoin (BTC) and the
broader cryptocurrency market last Thursday. According to data from AltIndex,
the total market capitalization of publicly listed cryptocurrency miners fell 30% within a month, from $9.5 billion to $6.7 billion. At the same time,
miners’ revenues from cryptocurrency mining dropped to monthly lows.
Bitcoin’s Flash Crash Cuts
Mining Companies’ Capitalization
Last
Thursday, Bitcoin’s price unexpectedly fell more than 7%, dropping to its
lowest levels in over two months, testing at $26,000. As a result, the market
capitalization of exchange -listed BTC miners and other digital assets suffered
significantly, sliding to almost $3 billion for the entire month.
Major
players, including Riot Platform and Marathon Digital Holdings, felt the most
significant losses. In their case, capitalization fell $1.1 billion (31%)
and $800 million (25%), respectively. Canaan, Hut 8 Mining, and Cipher Mining
Technologies also lost a substantial part of their market shares.
Source: AltIndex
Looking at
Riot Platform’s (NASDAQ: RIOT) chart, we see that the price is testing at over
two-month lows and has fallen almost 50% from the July highs. The company has
still gained over 200% since the beginning of the year but has had to part with
a significant portion of its profits realized since January.
Source: Yahoo Finance
Moreover, RIOT and Galaxy Digital Holdings disclosed disappointing financial results in the previous quarter.
BTC Miners’ Revenues
Lowest in a Month
Data
published by Glassnode earlier this week does not inspire optimism. They
show miners’ revenues have fallen to the lowest level in a month, amounting to
just under $170 million.
📉 #Bitcoin $BTC Miner Revenue just reached a 1-month low of $169,708.61
Previous 1-month low of $179,351.54 was observed on 17 August 2023
View metric:https://t.co/UYhnd9eeZH pic.twitter.com/hXbbDPERHl
— glassnode alerts (@glassnodealerts) August 22, 2023
In such a
situation, miners usually face a difficult decision: either sell their BTC reserves to
cover ongoing operation costs or weather the challenging period by cutting
profits. In the meantime, the difficulty of BTC mining was updated the day
before yesterday (Tuesday) and increased 6.17% to a historical maximum of
55.62 trillion hashes. This is another complication for companies operating in
the industry, negatively affecting generated revenues. In 2022, a similar
situation cut their total revenue by $6 billion.
As a
result, miners are beginning to look for alternative approaches to money
generation. For many, artificial intelligence (AI) is becoming an attractive
direction.
Cryptocurrency Miners Eye
AI Horizons
Cryptocurrency
miners are increasingly branching out to offer their substantial computing
capabilities to the rapidly expanding AI sector. A recent report from JPMorgan
reveals that top mining companies are no longer limiting their operations to
mining Bitcoin and other digital currencies. Instead, they are providing
high-performance computing (HPC) services to the AI industry, which is
experiencing a growing demand for computational power.
Well-known
names in the Bitcoin mining world, such as Riot Platform (formerly Riot
Blockchain) and Hive Digital Technologies (formerly Hive Blockchain
Technologies), have even rebranded to highlight their business diversification.
Cryptocurrencies mined and held in reserve have enabled them to invest and
adapt to a market increasingly influenced by AI developments.
“With
the rapid growth of AI, the increased demand for high-performance computing is
now opening a new and perhaps more profitable avenue for utilizing GPUs
previously used for ether mining,” JPMorgan commented in the research.
JPMorgan’s
research notes that the burgeoning AI industry’s demand for high-performance
computing may offer a more lucrative opportunity than traditional Bitcoin
mining, provided that large-scale real-world results confirm the promising beta
test findings.
Five
companies lost $2.8 billion due to a sudden drop in Bitcoin (BTC) and the
broader cryptocurrency market last Thursday. According to data from AltIndex,
the total market capitalization of publicly listed cryptocurrency miners fell 30% within a month, from $9.5 billion to $6.7 billion. At the same time,
miners’ revenues from cryptocurrency mining dropped to monthly lows.
Bitcoin’s Flash Crash Cuts
Mining Companies’ Capitalization
Last
Thursday, Bitcoin’s price unexpectedly fell more than 7%, dropping to its
lowest levels in over two months, testing at $26,000. As a result, the market
capitalization of exchange -listed BTC miners and other digital assets suffered
significantly, sliding to almost $3 billion for the entire month.
Major
players, including Riot Platform and Marathon Digital Holdings, felt the most
significant losses. In their case, capitalization fell $1.1 billion (31%)
and $800 million (25%), respectively. Canaan, Hut 8 Mining, and Cipher Mining
Technologies also lost a substantial part of their market shares.
Source: AltIndex
Looking at
Riot Platform’s (NASDAQ: RIOT) chart, we see that the price is testing at over
two-month lows and has fallen almost 50% from the July highs. The company has
still gained over 200% since the beginning of the year but has had to part with
a significant portion of its profits realized since January.
Source: Yahoo Finance
Moreover, RIOT and Galaxy Digital Holdings disclosed disappointing financial results in the previous quarter.
BTC Miners’ Revenues
Lowest in a Month
Data
published by Glassnode earlier this week does not inspire optimism. They
show miners’ revenues have fallen to the lowest level in a month, amounting to
just under $170 million.
📉 #Bitcoin $BTC Miner Revenue just reached a 1-month low of $169,708.61
Previous 1-month low of $179,351.54 was observed on 17 August 2023
View metric:https://t.co/UYhnd9eeZH pic.twitter.com/hXbbDPERHl
— glassnode alerts (@glassnodealerts) August 22, 2023
In such a
situation, miners usually face a difficult decision: either sell their BTC reserves to
cover ongoing operation costs or weather the challenging period by cutting
profits. In the meantime, the difficulty of BTC mining was updated the day
before yesterday (Tuesday) and increased 6.17% to a historical maximum of
55.62 trillion hashes. This is another complication for companies operating in
the industry, negatively affecting generated revenues. In 2022, a similar
situation cut their total revenue by $6 billion.
As a
result, miners are beginning to look for alternative approaches to money
generation. For many, artificial intelligence (AI) is becoming an attractive
direction.
Cryptocurrency Miners Eye
AI Horizons
Cryptocurrency
miners are increasingly branching out to offer their substantial computing
capabilities to the rapidly expanding AI sector. A recent report from JPMorgan
reveals that top mining companies are no longer limiting their operations to
mining Bitcoin and other digital currencies. Instead, they are providing
high-performance computing (HPC) services to the AI industry, which is
experiencing a growing demand for computational power.
Well-known
names in the Bitcoin mining world, such as Riot Platform (formerly Riot
Blockchain) and Hive Digital Technologies (formerly Hive Blockchain
Technologies), have even rebranded to highlight their business diversification.
Cryptocurrencies mined and held in reserve have enabled them to invest and
adapt to a market increasingly influenced by AI developments.
“With
the rapid growth of AI, the increased demand for high-performance computing is
now opening a new and perhaps more profitable avenue for utilizing GPUs
previously used for ether mining,” JPMorgan commented in the research.
JPMorgan’s
research notes that the burgeoning AI industry’s demand for high-performance
computing may offer a more lucrative opportunity than traditional Bitcoin
mining, provided that large-scale real-world results confirm the promising beta
test findings.
Published at Thu, 24 Aug 2023 13:54:42 +0200