Worst Year For Bitcoin Mining As Difficulty Increases To All-Time Highs

2019 was probably the worst year for bitcoin mining as both the hash rate and difficulty were increased to all-time highs and it seems that the mining pools absorbed a lot of losses. In our BTC news today we read further about the mining analysis.

Most of the bigger miners this year produced coins at a loss because of the unfavorable market prices but this didn’t lead to capitulation as previously expected.
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Instead, the miners redoubled their efforts to get about 12.5 BTC rewards before the halving next year. Looking at the worst year so far, there were two periods where the miners continued competing for rewards despite the drops in prices.

The last months of the year were one of the very few periods where the mining happened below the breakeven point. However, the miners also achieved big returns and some may decide to hold onto their coins. The newly produced Bitcoin also has a value of their own because of their lack of history but the having event could lead the miners limiting their activity and they will become unable to accumulate BTC. Back in 2019, the miners also had access to futures markets and this could have some offset of the losses from selling on the spot or OTC markets. With options on futures now available, some bitcoin miners will try to hedge the risks.

The bitcoin network hash rate keeps on fluctuation and it recently dropped to 88 quintillion hashes per second from the previous 101 quintillion hashes just a day ago. The biggest contributors are still the Chinese mining pools with Poolin taking the number one in block discovery. Right now, it is possible that some of the farms that invested in S9 ASIC will still be viable and will have a better ratio of expenses to bitcoin market prices.

There’s no consensus on breakeven prices but the current estimate on losses assumes a breakeven price of $7,000 and $8,000. The cheaper the electricity gets; the miners will be able to afford to produce BTC at a lower price. The rough estimates place the breakeven for the Chinese hydroelectric mining farms at $3,500.