The cryptocurrency world is reeling as Bitcoin plunges nearly 50% in just over a week, dragging mining operations into unprofitable territory and forcing widespread shutdowns across the industry. What was once a booming era of high returns has now turned into a survival test for miners, mining farms, and hardware manufacturers alike.
At the heart of this downturn lies a stark reality: even the most efficient mining rigs are now operating at a loss. With Bitcoin trading around $3,620 on November 25 — down from over $19,000 at the end of the previous year — the economics of mining have flipped dramatically.
Mining Economics Turn Upside Down
One of the most widely used and cost-effective mining devices, the Bitmain Antminer S9, has now fallen below its shutdown price — the point at which electricity costs exceed the value of mined Bitcoin.
At current prices (approximately $3,620 or 25,153 CNY), the S9’s power consumption results in an electricity cost ratio of 102% relative to Bitcoin’s market value. This means miners spend more on electricity than they earn from the coins they produce — and that doesn’t even include hosting fees, maintenance, or labor.
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This shift marks a turning point for the mining sector. In late 2017 and early 2018, the same S9 units were selling for up to 30,000 CNY amid a bull run where Bitcoin briefly surpassed 100,000 CNY. Today, secondhand models fetch only a few hundred yuan — some reportedly being sold by weight like scrap metal.
Massive Hashrate Drop Signals Industry-Wide Shutdown
The collapse in profitability has triggered a dramatic reduction in network hashrate. According to btc.com, Bitcoin’s total network hashrate peaked at 74.54 EH/s on October 4, 2018. By November 25, it had dropped to 42.01 EH/s, a decline of over 43%.
To put this into perspective, each Antminer S9 delivers about 13.5 TH/s. The lost hashrate equates to roughly 2.37 million S9 units being taken offline — a clear sign that this is not an isolated incident but a systemic industry contraction.
Mao Shixing, founder of F2Pool and co-founder of Cobo Wallet, described the current environment as “the most painful time for mining.” He highlighted the breakneck pace of technological advancement: new miners offering exponentially higher performance every few months render older models obsolete almost overnight.
“A miner that cost over 20,000 CNY in early 2017 is now worth just hundreds,” Mao noted. “Many miners are facing massive losses — average reported losses among operators reached around $10 million in 2018.”
Mining Farms Struggle Amid Falling Demand
Mining farms — large-scale facilities that host thousands of rigs — are feeling the squeeze from multiple angles.
Regions traditionally favored for low-cost energy, such as Yunnan, Sichuan, Xinjiang, Inner Mongolia, Guizhou, and Qinghai, are seeing reduced utilization rates. Some farms offer bundled rates as low as 0.38 CNY per kWh, covering both electricity and management fees. Yet even these competitive prices aren’t enough to retain clients.
Mr. Wang, a sales representative at one major mining farm, has shifted focus from attracting new clients to helping existing ones liquidate equipment. His social media feed is filled with posts like:
- “Selling 5 units of S9i, 14T, official power supply, shipped today”
- “Prices so low I can’t list them publicly”
But the challenge goes beyond idle machines. Farms often purchase electricity through fixed contracts with state grids. As Mr. Wang explained, “We pay for what we commit to — whether we use it or not.” With fewer miners hosting equipment, farms are stuck paying for unused capacity.
Regulatory pressure adds another layer of strain. Reports indicate that mining farms in Xinjiang and Guizhou have faced temporary power cutoffs for compliance reviews, including tax audits and cybersecurity documentation requirements.
New Hardware Fails to Spark Demand
Even next-generation mining hardware is struggling to gain traction.
Bitmain launched its flagship Antminer S15 in early November at 11,600 CNY. Initial reports claimed it sold out within five minutes — but skepticism remains high.
A follow-up call to Bitmain revealed units were still available with delivery in four days. A veteran miner named Mr. Zhang suggested the "instant sell-out" may have been a marketing tactic: “I haven’t seen anyone actually buying them. One reseller friend has over 200 units scheduled for December delivery — and he’s desperate to offload them.”
Performance analysis paints a bleak picture. At a retail electricity rate of 1 CNY/kWh, operating an S15 generates a daily loss of 10.22 CNY after power costs — before accounting for the initial purchase price.
In professional setups with cheaper power (around 0.40 CNY/kWh), the numbers don’t improve much. After one year of operation, an S15 would generate only 2,370 CNY in revenue against a 11,600 CNY upfront cost — a net loss of 9,230 CNY per unit.
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Clearly, new hardware offers little relief under current market conditions.
Core Keywords Integration
This downturn underscores key themes central to cryptocurrency mining:
- Bitcoin price volatility drives rapid shifts in mining viability
- Hashrate decline reflects broader network participation trends
- Mining profitability hinges on energy costs and hardware efficiency
- The concept of shutdown price becomes critical during bear markets
- Rapid mining hardware obsolescence increases financial risk
- Geographic factors like low-cost electricity regions determine competitive advantage
- Market cycles amplify cryptocurrency mining risks
These elements combine to create a highly cyclical and unforgiving industry landscape.
Frequently Asked Questions
Q: What is the "shutdown price" for Bitcoin mining?
A: It’s the price at which the cost of electricity to mine one Bitcoin exceeds its market value. Below this threshold, miners lose money with every block mined.
Q: Why did the network hashrate drop so sharply?
A: As Bitcoin’s price fell below the profitability margin for older miners like the S9, millions of units were powered down, leading to a 43% drop in total computational power.
Q: Are new miners still profitable?
A: Under current prices (~$3,620), even advanced models like the S15 operate at a loss when factoring in electricity and acquisition costs.
Q: Can mining farms survive this downturn?
A: Only those with ultra-low power costs, flexible contracts, and diversified revenue streams are likely to endure prolonged bear markets.
Q: Is this crash similar to previous crypto winters?
A: Yes — 2018 echoes the post-2013 crash, where speculative excess gave way to consolidation. However, today’s mining industry is far more industrialized and capital-intensive.
Q: What drives Bitcoin’s price decline?
A: Analysts cite lack of intrinsic value, regulatory uncertainty, reduced speculative interest, and macroeconomic factors affecting investor sentiment.
The Road Ahead
From $6,417 on November 14** to **$3,620 by November 25, Bitcoin lost nearly 44% of its value in 11 days, wiping out $48.6 billion in market capitalization. While some see this as inevitable correction after unsustainable hype, others warn of deeper structural issues.
The mining sector — once seen as the backbone of network security — now faces existential pressure. Without a meaningful price recovery or significant reductions in operational costs, further consolidation seems inevitable.
Yet history shows that Bitcoin thrives on cycles of boom and bust. Those who survive this winter may emerge stronger when the next bull phase begins.
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