DeutschThe Bitcoin price crashes, and miners hit the emergency brake. After years of increasing hash power and record profits, the digital coin miners are now experiencing a scenario last seen in 2021 during the Chinese mining ban. Mining difficulty dropped to 125 trillion, an 11 percent decrease within a few days. A clear signal that even the strongest network participants are coming under pressure.
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At the heart of the problem is the hash rate and its economic counterpart, the so-called “hash price.” It indicates how much a miner earns per terahash. Currently, this value has fallen to a historic $0.032. A record low. For comparison: In 2017, the hash price briefly climbed above three dollars. Even after the highs of subsequent years, income never returned to a similar level. The numbers paint a clear picture: The boom is over, and miners’ profitability is shrinking dramatically.
Bitcoin Crisis: Why it spells the end for miners
The current figures reflect the structural strain on the industry. The Chinese ban in 2021 had already turned global mining upside down. After the closure of mining farms in China, a large portion of the equipment migrated to Russia, Kazakhstan, and other regions. At that time, mining difficulty fell by more than 25 percent because many machines were temporarily idle. Today, the situation is similar: The recent drop in difficulty shows that weaker miners are being pushed out of the market.
Another burden is the halving in April 2024. Bitcoin rewards for miners halved, putting additional pressure on earnings. Companies that were already operating on tight margins must now weigh whether to continue investing or pull the plug. Many small miners seem to have already made this decision.
But it’s not just the miners who are suffering. The entire Bitcoin ecosystem is also feeling the effects. Falling hash rates and a decreasing number of active miners increase volatility in the short term. At the same time, market dynamics show that the strongest players could benefit in the long run. Those who survive the turbulence will benefit from a less crowded market and potentially higher prices in the future.
Crypto Parallels to 2021
The parallels to 2021 are unmistakable. Back then, mining shifted globally, and only the most efficient operators remained. Today, a similar pattern is emerging: Consolidation forces weaker companies to give up, while strong miners lay the foundation for the next phase of the Bitcoin network.
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Analysts see this as a kind of natural selection in the crypto market. The weak are eliminated, the strong survive. For investors, this means short-term uncertainty, but a more robust network in the long term. For the miners themselves, the question remains who will survive the crisis and who will pull the plug. (mck)
