Harsh reality has struck a severe blow to virtual world of cryptocurrencies. The prolonged crypto winter is now impacting public miners, the scavengers that have flourished as an industry due to growing adoption, is now fighting for its survival.
And, the reason being Hash rate witnessing a major drawdown since July 2021. The energy dependent fledgling mining industry is beaten down by rising energy costs, debts and depressed Bitcoin prices.
At the end of November, we saw a 13.1% decline in hash rate from all-time highs. However, of the major hash rate declines since 2016, that’s still relatively small compared to the handful of down periods over 15% during that time.
Even with the latest drawdown in hash rate, we’re not seeing announcements come from major public miners. Most public miners’ hash rate is either flat or is growing over the last month.
In bitcoin terms, miners’ stock performance continues to fall this year when looking at year-to-date returns versus bitcoin performance. The market cap of public miners has fallen over 90% since all-time highs.
The recent downward difficulty adjustment brought about some relief, but it is barely sufficient for many miners who purchased the bulk of their machines in 2021, expecting $30,000 as their “worst-case scenario.”
Although the industry has been bludgeoned over the course of 2022, it isn’t out of the woods quite yet. Well, the beauty of capitalism is that only the strong will survive. Regardless, blocks will continue to be mined every approximately 10 minutes.
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