As the Bitcoin (BTC) mining business increasingly struggles, the price of ASIC mining hardware has fallen 80% since its peak in 2021. What does this mean for the future of the industry and the crypto market? We explain.
Mining machines in reduction
Here’s another sign that the Bitcoin (BTC) mining industry is in disarray. ASIC miners, the machines used to mine bitcoins, are selling at pitiful prices compared to their 2021 highs. Down 80%, they are back to levels not seen since 2020.
Price trends for Bitcoin ASIC mining machines
As this data from the Hashrate Index website shows, ASIC prices are in free fall. If we look at machines that produce at least 1 terahash per 38 Joules of energy – the most efficient on the market – their price has fallen from $119 in May 2021 to $15 at the time of writing.
This trend is also reflected in the less efficient machines, which have fallen in price by 90% over the same period. Such levels have not been seen since 2020. But what explains such a drop in prices and how to analyse it?
The mining industry in trouble
In concrete terms, this price drop is part of a complicated global context for the Bitcoin mining industry. Players are struggling to remain profitable as the bear market continues. Many companies are filing for Chapter 11 bankruptcy in the US, such as the giant Core Scientific.
In concrete terms, the profitability of a Bitcoin miner is calculated according to four criteria: its computing power, the difficulty of mining Bitcoin, the price of Bitcoin and finally the cost of energy. For the first time since the creation of Bitcoin, three of these four criteria are extremely unfavourable.
The current energy crisis has pushed electricity prices to record highs. Although some miners have optimised their activity to exploit cheaper energy (by basing themselves in developing countries or connecting to power plants), this variable weighs heavily in the balance.
So is the drop in ASIC miner prices reason enough to start mining bitcoins at home? For all the reasons mentioned above, the answer is certainly no. The cost of electricity is through the roof, as is the difficulty of mining, while the bitcoin price is at its lowest: all the ingredients for a bad sauce.
