In recent years, an entire industry has developed around the acclaimed price reports for cryptocurrencies like Bitcoin: crypto banks, Bitcoin brokers and mining factories full of special computers and graphics cards that are the first to generate digital money. Now it’s collapsing: The plummeting and likely long-term taxed prices, coupled with the high electricity price, are pushing one crypto company after another into the deep.
This is reported by the IT portal Golem.de, citing the analysis service Arcane. This predicts that major mining companies, some of which are even publicly traded, will face huge problems in the coming weeks and months.
High electricity costs make mining unprofitable
For mining companies like Riot Blockchain or Marathon Digital, electricity costs represent up to 80 percent of the cost – so cryptocurrency generation is only profitable where electricity is cheap. The massive rise in electricity prices, coupled with the drop in prices, is now causing electricity costs to eat into income in many places.
The analytics service states that mining companies like Marathon are struggling to pay for ongoing hardware deliveries and therefore need to monetize some of their Bitcoin or Ethereum reserves. However, given the currently very low prices, this is not very effective.
With layoffs against the “crypto winter”
The prices of major cryptocurrencies such as Bitcoin or Ethereum fell massively in May and have not recovered since. The Bitcoin scene is already preparing for an extended period of weakness, some are talking about a “crypto winter”. This is putting enormous pressure on the crypto industry, which has grown rapidly in recent years.
In recent weeks, waves of layoffs and bankruptcies have become public. For example, Viennese crypto exchange Bitpanda is laying off a quarter of its workforce, and US rival Coinbase is also losing hundreds of employees. Cryptobank Voyager Digital filed for bankruptcy on Wednesday, just before another crypto bank, Three Arrows Capital, went bankrupt.
Source: Krone
I’m Wayne Wickman, a professional journalist and author for Today Times Live. My specialty is covering global news and current events, offering readers a unique perspective on the world’s most pressing issues. I’m passionate about storytelling and helping people stay informed on the goings-on of our planet.
