Bitcoin prices have been obliterated over the past 12 months, falling over 80% from December 18 last year.
Such has been the scale of the slide, they’re becoming increasingly uneconomic to mine given the costs involved.
JP Morgan explains (our emphasis added):
The latest decline in prices towards $3,000 per Bitcoin has also seen a sharp decline in the hash rate. This suggests that prices have declined to a point where mining is becoming uneconomical for some miners, who have responded by turning their mining rigs off. What had been striking with the Bitcoin hash rate was that it peaked only recently at the end of October i.e. much later than the peak in Bitcoin prices at the end of 2017. Combined with price declines, the surge in the mining activity in the first ten months of the year, partly driven by chip manufacturers deploying miners to test their products and partly by miners adopting more efficient operations, created a collapse in mining profitability from $4/Day for 1THash/s at the end of 2017 to $0.16 currently. Therefore in the absence of any stabilization in prices, the least efficient miners were forced to exit mining activity abruptly.
Here’s a chart from JP Morgan showing the steep decline in Bitcoin mining profitability this year.
Even in this market, there is a cost curve for production, just like in conventional resources mining. And when prices tumble this far this fast, it means many previously profitable miners are now having to power down their operations.