Bitcoin
Bitcoin Miners Navigate Capitulation Amid Shrinking Profit Margins
Bitcoin miners are currently facing significant “capitulation,” forcing them to innovate to earn additional revenue.
Bitcoin miner capitulation occurs when miners are forced to close due to lack of profitability or unsustainable operating costs. This can happen when the cost of mining (including electricity, hardware, and operating expenses) exceeds the revenue generated from mining the underlying asset.
Bitcoin Miners Face Economic Pressures Amid Capitulation
Data from CryptoQuant shows a 7.6% drop in Bitcoin Mining Hashrate this month, now similar to levels last seen during the FTX exchange collapse in December 2022. Unlike that period, today’s decline follows the recent Bitcoin halving, reducing miner rewards to 3,125 BTC.
Capitulation of Bitcoin miners. Source: CriptoQuant
Miners are also grappling with reduced revenue from alternative sources as network activity declines. Initially, they benefited from high rates during Bitcoin based Rune Protocol Frenzy post-halving. However, profits fell sharply network activity slowed down.
On June 29, daily Rune transactions plummeted from a peak of over 753,000 on April 23 to 21,861, marking a drastic 90% drop. Consequently, miners’ total earnings from Rune transactions fell to less than 2 BTC last week, down from a peak of over 1,000 BTC on April 20.
See more information: Making Passive Income with Crypto Mining: How to Get Started
Faced with these economic pressures, miners are shutting down their machines and have stepped up selling activities this month. Last week, BeInCrypto reported that miners unloaded approximately 30,000 BTC, valued at US$2 billion.
To further diversify revenue streams, miners are increasingly turning to artificial intelligence (AI) and another Proof of Work (PoW) assets. Companies like Core Scientific and Hut 8 have secured significant funding for AI expansion. Matthew Sigel, head of digital research at VanEck, reported that Morgan Stanley’s head of sustainability research Stephen Byrd explained that these moves show that miners see potential profitability in AI ventures amid evolving market dynamics.
“I respect the idea that Bitcoin mining can become more profitable. There’s a game theory here… the more people who leave Bitcoin mining and become data centers, the more attractive it is for those who remain,” Byrd reported. he said.
Read more: Top Cryptocurrency Mining Pools to Join in 2024
On the other hand, Marathon Digital, the largest BTC mining companyhe has announced its entry into Kaspa mining, a PoW project. The company said it had mined 93 million KAS, valued at approximately $15 million, as of June 25.
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