Crypto Mining Activity Peaks As Miners Face Harsh Crypto Winter, Plummeting Bitcoin Price

While the crypto community was left rattled by the FTX FTT/USD debacle throughout November, crypto mining firms relentlessly pursued all available avenues to shore up revenues and maintain margins.

In what is possibly one of the harshest crypto winters ever seen, these digital asset mining companies are adopting innovative solutions to overcome the many challenges dotting their path.

Take for example Riot Blockchain Inc RIOT which achieved a record hashrate of 7.7 EH/s in November, despite falling short of production expectations due to variances in the payout method of the mining pool it uses.

While the company decided to switch its mining pool to one that offers a more stable reward mechanism, it plans to enhance its current fleet of 72,428 miners and achieve a hash rate capacity of 12.5 EH/s by Q4 FY2022-23.

Also read: Hut 8 Stops Mining Of Bitcoin Due To Energy Conflict

Focus On Infra And Efficiency Gains To Mine More Bitcoin

North America’s Hut 8 Mining Corp HUT improved its hashrate capacity to 3.27 EH/s and achieved an average production rate of ~7.9 Bitcoin BTC/USD per day in November.

Having installed 2,000 new MicroBT Whatsminers at its Medicine Hat mining facility. Hut 8 produced 238 Bitcoin and holds a large reserve of 8,925 Bitcoin as part of its longstanding HODL strategy.

The company is confident that its healthy balance sheet will enable it to hold onto its crypto holdings even in the current bearish phase, and has been focusing on upgrading its mining capacity further in order to produce more Bitcoin output going forward.

In the case of TeraWulf Inc WULF which has a fleet of 17,500 miners, it slashed its cost of power from $11,000 per bitcoin to $6,000, achieving a 45% drop as compared to October 2022 and ~13% higher Bitcoin production as a result. Averaging a hash rate of 1.9 EH/s in November 2022, 20% higher than the previous month, the company has reduced its power expenses by 60% from its average in the June-September quarter.

The American miner plans to add another 15,000 miners to its Nautilus Cryptomine Facility in Pennsylvania by Q1 2023 and increase its dependence on zero-carbon energy from its current level of 91%. 

Ethereum Merge Fuelling Diversification And Switch To Bitcoin Mining

With the Ethereum ETH/USD network switching over to a proof-of-stake (PoS) consensus mechanism, miners who relied heavily on Ethereum mining have had to act quickly and switch to other revenue streams.

While some miners have moved on to mining altcoins, the lower rewards on offer have made it unsustainable to continue operations for most.

However, mining firms like HIVE Blockchain Technologies  HIVE made the transition to Bitcoin mining after previously being a leading Ethereum miner.

Relying solely on renewable energy for its mining operations, Hive has admitted to facing higher operating expenses due to mining difficulty and had reported a 44% decline in revenues for the first three quarters of 2022 compared to the same period last year in its second-quarter earnings release in mid-November.

The Canadian Bitcoin miner has sold all of its Ethereum holdings and is now totally committed to enhancing its 2.6 EH/s hash rate capacity.

Subdued Crypto Prices And Higher Energy Prices Add Pressure On Margins

Despite all the advancements and unique strategies being employed in the crypto mining industry, the dual impact of depressed cryptocurrency prices and higher energy prices on account of geopolitical disruptions can threaten the financial health of many miners.

CleanSpark Inc CLSK is one such victim, which, despite having met hash rate guidance of 5.5 EH/s with 55,000 latest-generation Bitcoin miners, has expended more Bitcoin than it produced in November to maintain operations.

The company mined 535 Bitcoin last month but had to sell 544 Bitcoin at an average price of $17,300 to fund growth and operations.

Although CleanSpark continues to add new machines and identify opportunities to extract operational and power efficiencies, it does highlight the issues being faced by less austere and financially solid crypto mining companies that are battling for the same pie today.

As Bitcoin mining difficulty increased by almost a third between early August and the last adjustment made on Nov. 21, the future remains fraught with challenges for the crypto-mining industry at large.

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