As a result, Bitcoin's hashrate may take a direct hit because of miners' inability to make profits.
Bitcoin miners are struggling to make profits
In the last few months, several bitcoin mining firms have experienced a number of financial troubles.
Recently, Argo Blockchain announced that the company is currently facing a cash crunch after the collapse of a $27 million equity infusion.
Similarly, another Bitcoin mining firm, Luxxfolio, shared new insights on the current market upheavals that the Bitcoin mining industry has been encountering of late.
The firm shared how the bitcoin mining industry has been experiencing intense pressure due to the decline in the price of Bitcoin despite the rising hashrates.
Luxxfolio further stated:
The Bitcoin mining industry faces intense pressure." The market price for bitcoin has plummeted while the hash rate has reached new highs. The result is lower revenues for each coin mined. At the same time, electricity prices are increasing, further eroding profitability. "To date, LUXXFOLIO has reduced its debt and moved to lower-cost immersive mining, but it remains unprofitable.
The company went forward to announce that it may soon be compelled to shut down its operations if it fails to find a suitable buyer to help navigate the current market crisis.
Another Bitcoin mining company called Iris Energy has also published a similar statement.To deal with the present market conditions, the company is considering a restructure.
In a statement from Iris Energy:
Certain equipment (i.e., Bitcoin miners) owned by the special purpose vehicles currently produces insufficient cash flow to service their respective debt financing obligations and has a current market value well below the principal amount of the relevant loans. Restructuring discussions with the lender remain ongoing.
BTC hashrate may soon tumble
With the mining industry struggling to stay afloat, Bitocin's hashrate may drop as miners migrate to new businesses in search of stable profits.
The miners' stance is changing due to rising inflation and electricity costs, which is making it difficult for them to mine BTC in peace.
Currently, it costs $19,300 to mine one bitcoin, which is not considered profitable in the current crypto environment.