Bitcoin miners are making drastic changes in behavior as the market has repriced BTC to less than 50% of the all time high it reached last year. Historically, miners sold to meet expenses, but many were habitually holders. This is changing as BTC prices plummet, and energy prices, one of their primary expenses, drastically increases.
Large BTC mining firms such as Bitfarms (BFIT) and Stronghold Digital (SDIG) have cut back on their plans to expand, while firms like Riot Blockchain (RIOT) have been forced to liquidate BTC holdings.
The current situation for these miners is not promising. As far as their expenses go, energy expenses worldwide continue to rise and supply chain issues continue to plague the technology sector, causing price increases for mining hardware and longer times to access critical infrastructure. On the side of revenue, a combination of ever increasing BTC mining difficulty and a multi-quarter slide in BTC prices has cut cash flow significantly.
The larger macro-economic situation isn’t looking much better. Volatile currency exchange rates (EUR/USD has gone from ~1.23 last year down to 1.05 now) has seriously harmed some firms. Wide scale asset price depreciation and credit tightening has resulted in access to capital being restricted, which makes operating capital intensive companies like crypto miners difficult.
Even with all of the headwinds miners are facing, analysts say they have a long way to go before they are no longer profitable. BTC stands at roughly $26,000 right now, and some estimates say firms are profitable up until ~$5,000 to ~$15,000.