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As bitcoin prices fall, mining cryptocurrencies is no longer profitable for many

  • Bitcoin prices fell nearly 30 per cent over the past week, hitting a 13-month low of about US$4,500
  • Loss-making cryptocurrency miners are dumping plenty of their mining rigs

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Bitcoin slumped on Tuesday to its lowest this year as prices fell as much as 10 per cent to breach US$4,300, coinciding with broader drops in the world’s financial markets. Photo: Agence France-Presse
Zheping Huang

When the price of gold tanks, miners get hurt. It is the same story in the wild world of cryptocurrencies.

Prices of bitcoin, the world’s leading digital currency, have tumbled nearly 30 per cent in the past week and hit a 13-month low of about US$4,500, according to data from CoinMarketCap. The total market value of cryptocurrencies has slumped to US$148 billion, which is less than one-fifth of its worth during the market’s peak in January.

A clash among supporters of bitcoin cash, the most successful bitcoin offshoot, was largely blamed for the market meltdown. The world’s fourth largest cryptocurrency split into two distinct entities on November 16 amid long-standing, fundamental disagreements in the community.

A day before that split, Hong Kong-based cryptocurrency exchange OKEx forced early settlement of bitcoin cash futures contracts on its platform, which is widely thought to have triggered the sell-off.

The price drop has left miners – those who process transactions in return for new units of cryptocurrency as reward – in a vulnerable position. It has become unprofitable for these enterprises and individuals to run at least four models of bitcoin mining machines, if they consume power at a rate of 0.4 yuan (6 US cents) per kilowatt-hour (kWh), according to the latest estimates of Beijing-based F2Pool, one of the world’s biggest bitcoin mining pools.
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