Bitcoin is crashing hard, reaching historic lows of well below the $70,000 mark. At the time of writing, the token is hovering just above $63,000, levels we haven’t seen since October 2024.
The ongoing plunge has made it far less economical to mine the digital token, a notoriously compute- and energy-intensive process — to the point that large-scale computing companies are starting to unplug their equipment, as Bloomberg reports.
As prices continue to plummet and electricity costs climb, it’s become tough out there for a crypto miner. The hash price index, which is used to determine how much revenue miners can make by mining crypto, reached its lowest point on record this week, according to mining services company Luxor Technology.
According to Coindesk, the average cost to mine one Bitcoin is currently around $87,000 — far higher than its current going rate, making it an extremely unprofitable proposition.
It’s a massive wipeout as investors continue to sell off their reserves, with some comparing it to the time China banned crypto mining in 2021. Crypto enthusiasts are expecting the worst, with some predicting the token will nosedive to just $30,000.
“The decrease is historic, the largest since the China ban,” mining company CleanSpark chief business officer Harry Sudock told Bloomberg, explaining that winter storms raising electricity prices, combined with a recent broader tech selloff, were likely to blame.
Turning off mining hardware during extreme weather conditions or surges in prices isn’t unheard of — but given the crypto’s ongoing demise, a far rarer situation is playing out.
While the extremely volatile cryptocurrency has been put through the wringer on several occasions over the years, the decline comes at a striking moment.
As CNN points out, crypto is hailed as a safe haven by its proponents. Given geopolitical turmoil and plenty of economic uncertainty, crypto’s price should’ve instead skyrocketed — yet precious metals, most notably gold, have fared well while Bitcoin has crashed. The value of an ounce of gold reached an all-time high late last year as investors looked for much safer bets than volatile cryptocurrencies. (Gold prices have since lurched down, but stabilized around a considerably higher price than before the rally.)
The investor Michael Burry, who famously shorted the US housing market before its collapse in 2008, argued in a Substack post this week that further selloffs could lead to a “death spiral” for the broader economy that could be difficult to recover from.
“There is no organic use case reason for Bitcoin to slow or stop its descent,” he wrote.
Even gold could fall victim to the recent downturn as “physical metals may break from the trend on safe haven demand,” Burry speculated, if “tokenized metals futures” were to collapse.
Instead of mining crypto, companies are starting to pivot, according to Bloomberg, allocating their hardware to powering AI models instead of mining crypto.
Whether that will turn out to be a safer bet as investors are starting to get cold feet over AI as well? That remains to be seen.
More on Bitcoin: The Streets Are Saying Bitcoin Is Gonna Fall to $30,000
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