Miners Feeling The Hard Times; Bitcoin Mining Remains Unprofitable In Q3 2022

KEY POINTS

Some Bitcoin miners abandoned mining because it is no longer profitable
One of the major factors affecting Bitcoin miners' ability to gain profits is the surge in power rates across the U.S
The average price of hosting contracts also increased

With the price of the world's largest cryptocurrency by market capitalization Bitcoin (BTC) continuing to plummet and the cost of Bitcoin mining surging, the entire third quarter of this year has been tough for miners.

A new report from Hashrate Index, a website that features data and provides transparency to the bitcoin mining industry, disclosed that the rate at which public miners sold mined BTC has dropped for the first time since May of this year. The best indicator of unprofitability for the quarter is the hash price.

It is the revenue that miners make per unit of hashing power, which since the start of the year has been free-falling. Based on the report, after Bitcoin's price plummeted below $20,000, the hash price also fell.

Considering the increase in Bitcoin mining difficulty, the hash price nosedived by 5%. "Throughout Q3, USD hash price fell from $83.30/PH/day to $79.60/PH/day (-5%)," the report noted. The drop in the average USD hash price in the second and third quarters underlines a massive difference.

While the average USD hash price was $141.20/PH/day in the second quarter, it plunged to only $92.70/PH/day in the third quarter. "Q3's average USD hash price was $92.70/PH/day vs. Q2's average of $141.20/PH/day(-34%)," Hashrate Index disclosed.

Overall the hash price dropped by 73% on a yearly basis. "Year-over-year (the end of Q3-2021 to the end of Q3-2022), USD hash price declined from $290.40/PH/day to $79.60/TH/day (-73%)," the report further noted.

One of the major factors affecting Bitcoin miners' ability to gain profits is the surge in power rates across the U.S. Compared to last year, the average industrial cost of electricity rose by 25%. The increase in the production cost also made hosting contracts a lot more expensive.

Currently, the average price of hosting contracts is $0.08-0.09/kWh, a huge spike from the previous power prices which only ranged from $0.05 to $0.06/kWh. Bitcoin miners are now feeling the hard times, and while some of them abandoned mining, others have started to liquidate their BTC treasuries.

As of 3:28 a.m. ET Friday, Bitcoin was trading down 0.40% at $19,043.44 with a 24-hour volume of $22,671,310,666 according to the latest data from CoinMarketCap.