Last Updated: 19 July 2022
The bear market and rising energy costs are creating a “perfect storm” for the bitcoin mining industry, which has already forced many miners to sell their reserves and lay off staff. Some analysts have even gone so far as to say that bitcoin miners are entering a so-called “death spiral,” with more and more miners having to take the machines off the grid until the network comes to a complete halt.
Cory Klippsten doesn’t believe much of it
Cory Klippsten, the CEO and founder of Swan Bitcoin, does not believe the stories about miners going into a death spiral. According to Klippsten, what these doomsayers fail to understand, is that Satoshi Nakamoto’s “difficulty adjustment” is the solution to this. Roughly every fortnight, the network changes the difficulty of finding blocks based on the hash rate.
As a result, we are seeing Bitcoin’s hash rate drop and an uptick in Bitcoin miners selling their Bitcoin holdings in order to pay for operational costs and service their debt obligations.
— Cory Klippsten (@coryklippsten) July 6, 2022
If it actually gets to the point where the hash rate takes a huge nosedive, it may take a little over two weeks before the difficulty level is adjusted downwards, but that it happens is inevitable. This automatically brings the network back to a point where it is profitable for some of the miners to continue their operations.
According to Klippsten, the difficulty adjustment is exactly what makes Bitcoin almost unstoppable. So far, the hash rate removal has not been too bad. The difficulty adjustments have not gone beyond a few percent so far.
Not all miners in trouble
Raymond Nasser, CEO of Arthur Mining, a professional mining company operating in the United States, says their margins do not match the data published by PricedinBTC. That data revealed that the cost of mining 1 bitcoin in the United States ranges from $13,143 to $54,862.
— Priced in ₿itcoin ∞/21M (@PricedinBTC) July 9, 2022
Arthur Mining’s current capacity is 25 megawatts, and the company focuses on using environmentally friendly forms of energy. Nasser’s mining operation mainly uses undervalued energy that comes from flaring excess gas from the oil and gas industry.
Their secret is to deploy mobile bitcoin mining facilities, which allow them to run entirely on green energy and are more efficient than traditional parties. “Our all-in energy costs are less than $0.02 per kWh in two different US states,” Nasser said of his company’s costs.