Bitcoin’s drop from all-time highs to $15,700 low is one of the most high-profile stories of the year. Bitcoin has lost 75% of its value since November 10, 2020, and more than 65% since the beginning of the year.
But a far more remarkable story than Bitcoin’s volatility is the divergence between its price and hashrate.
Despite losing three-quarters of its value in a year, Bitcoin’s hash rate hit an all-time high of 271.8 EH/s. This hash rate-price divergence is a unique phenomenon that has never been seen before in a bear market.
The skyrocketing hash rate becomes an even bigger outlier when compared to miner earnings. CryptoSlate has previously analyzed miner earnings and found that even the largest and most efficient mining operations continue to lose profits.
CryptoSlate’s analysis of two popular Bitmain miners shows a tough situation in the mining industry. Looking at the Antminer S9 and Antminer S17, we can see that the machines are struggling with profitability.
Launched in 2017, the Antminer S9 continued to turn a profit through years of market volatility. However, as the global hash rate began to grow in 2020, the S9 became less profitable and eventually became unprofitable in May 2022 with nearly all machines removed from the network.
With all maintenance costs around $0.05/kWh, the price of Bitcoin would need to exceed $19,000 for the Antminer S9 to be profitable again.
Antminer S17 is still profitable. Launched in 2019 as a more powerful iteration of the S9, the S17 produced a maximum hash rate of 56 TH/s. With Bitcoin’s current price and rising hash rate, S17’s profitability is only $36 per day. This modest gain has been declining almost daily and is expected to decline further in the coming weeks.
The S17 has struggled with profitability throughout the year. S17 became unprofitable for the first time as Bitcoin fell well below his $16,000 mark in June 2022, wiping billions of dollars from the market with Terra’s collapse in June 2022.
Ongoing market volatility, combined with ever-expanding hashrates, is now calling S17’s profitability into question. A look at the S17’s profitability chart shows that the machine is experiencing similar trends to his S9.
With Bitcoin barely breaking even below $15,500, S17 becomes unprofitable. Above $15,500, miners will unplug thousands of his S17s.
