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Digging Deep: BitMex Finds Miners Are Barely Scraping By

Ofer Sharon
11 December, 2018
1 min read
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The cryptomining industry has been hit hard by the latest crypto market crash. According to a study conducted by crypto exchange BitMex, many miners in the community have been in the red, reaching negative ROIs.

 

BitMex Research performed an extensive analysis of the current state of the cryptomining industry, and found that the revenues for the entire Bitcoin mining industry fell by more than half, from almost $400M a month in November down to under $200M a month for December.

"Many miners are struggling [...] The recent price crash is likely to have sent almost all the miners into the red."

BitMex Research December Report

The report states that the gross profit margins of miners fell from 50 percent before the crash, down to 30 percent for Bitcoin and as low as 15 percent for Ethereum after it. Miners with higher electricity or equipment expenses have even reported negative ROIs. Profit margins for mining of Bitcoin Cash ABC actually went negative during the BCH Hash Wars, as the two camps chose to mine uneconomically as part of their warfare.

Bitcoin Cash ABC Mining Revenue. BitMex Research.

Bitcoin Cash ABC Mining Revenue. BitMex Research.

"The mining industry may be under considerable stress right now, due to the falling prices of cryptocurrency."

BitMex Research December Report
What Triggered the Crash

BitMex further addressed the possible causes for the market crash. One of the common theories is that the BCH Hash Wars are what triggered the prices to start tipping in the first place. The claim being that miners involved in the BCH Hash Wars sold bulks of their Bitcoin in order to finance the warfare. BitMex cited the cryptocurrency intelligence monitoring platform Boltzmann had detected unusual large selling of Bitcoin from miners, just days before the BCH fork. But the report went on to say that while the hash wars may have been a catalyst, "We think it’s likely that prices would have been weak regardless of any miner selling prior to the Bitcoin Cash split. For cryptocurrency, trader sentiment is king."

Some Like Their Margins Green

BitMex's analysis shows a very grim state for the mining community. But not all miners must suffer losses. Miners with very low electricity expenses, or those who have managed to get their mining rigs at discount prices from equipment bargain sales, could still be in the green.

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