Below is a direct excerpt from Marty’s Bent Problem # 1240: “Another downward difficulty adjustment is in progress.” Sign up for our newsletter here..a bit
Don’t look at it now, but on July 21, 2022, there should be a downward difficulty adjustment of about 5%. This is the 4th time of 3 consecutive downward adjustments in the past 5 difficulty epochs. Marking the longest series of downward revisions since this time in 2021, when miners were forced to unplug and migrate from China as soon as possible.
The Bitcoin market experienced a major de-leveraging event as a result of a Ponzi explosion with many lenders exposed to the Ponzi scheme (3 Arrows Capital) as the global macro outlook deteriorated during 2022. Bitcoin miners are in pain as they have been completely wiped out and the price of Bitcoin has fallen with them. The downward pressure on Bitcoin prices has pushed down hash prices. Just a week ago it hit a low of $ 0.08TH / day.
Since then, recent price increases have helped hash prices recover to $ 0.10 per day, but it’s clear that many mining players are in pain. The two indicators I’m looking at to measure pain are the listed miner’s Bitcoin treasure trove (holding or selling) and the price of the ASIC. In the last two months, listed miners have sold tens of thousands of Bitcoins to pay off their debts and maintain a cash runway for their businesses. At the same time, the price of ASICs, measured in dollars per terra hash, has risen absolutely, reaching levels not seen since late 2020.
I personally see the finest machines selling for $ 25 to $ 30 / TH this week. In context, these same caliber machines were sold well above $ 100 / TH just before the Chinese ban, and $ 100 / TH in December 2022 when the dust created by the Chinese ban settled down. It was sold before and after. ASIC prices are declining rapidly as miners who don’t want to sell Bitcoin (or have nothing to sell in the first place) have decided to sell machines instead of covering costs and debt. Currently, there are tens of thousands of unopened machines in warehouses across the United States. Some listed miners have used access to capital markets to secure large ASIC futures orders delivered later this year. Some of those miners have a hard time finding the capacity needed to connect all their machines in a timely manner. Mining stocks have been absolutely hit alongside Bitcoin prices, proving to be too costly to maintain a declining ASIC.
In addition to this, miners with relatively high electricity prices have seen their business unprofitable. If they can’t put their losses into the stomach for consecutive months, they will stop and liquidate their assets (ASICs). Therefore, the very low ASIC pricing that the market is currently seeing.
ASIC prices are expected to continue to fall throughout the summer as the market continues to slump and Bitcoin remains in the low $ 20,000 range. These fire sales from desperate miners and manufacturers offer an incredible opportunity for anyone in the mining industry with considerable capital and execution capabilities. Your uncle Marty sees the end of the summer of 2022 as one of the best times to enter the mining industry in Bitcoin’s history. By the time these machines reach ROI, if individuals or businesses scoop up ASICs at these levels, set reasonable electricity prices, connect machines quickly, and Bitcoin prices recover at some point later this year. The time it takes will be very short.
When it unfolds, we keep you up to date. Until then, enjoy the downward adjustment of difficulty! It’s a beautiful reminder that Bitcoin works as designed and if you’re a miner currently in operation, you’ll probably stack more sats.