The cost of a single Bitcoin reached $65,000 in late 2021. Since then, the price has dropped by 70%, wiping out the fortunes of the once-booming cryptocurrency mining sector.
These processes are responsible for creating bitcoin and other cryptocurrencies, frequently employing enormous computer clusters that need a lot of electricity to execute.
For years, several states and cities have been competing to draw this industry. Others, opponents claim, are undermining renewable energy aspirations in the nation and around the world. They have been less accommodating.
At this month’s CES in Las Vegas, the cryptocurrency community looked keen to demonstrate that it is unfazed by the present situation.
In other words, “but actually the crypto OGs” are present here.
Early in 2018, months before FTX collapsed and founder Sam Bankman-Fried was detained, the crypto winter began.
Sheila Warren, CEO of the business organisation Crypto Council for Innovation, stated that these incidents haven’t improved public awareness from the floor of the CES.
However, she added, “the thing I’m definitely seeing here at CES is that this isn’t going away.” It is unquestionably here to stay.
But there’s little doubt that the sector is struggling. This is particularly true for companies that profit from mining bitcoins. Shares of many of these companies have plummeted across North America, plunging 90% or more in the past year.
The price of bitcoin generally is probably the biggest issue. When your revenue is reduced by 70%, your business is fundamentally changed, according to Ben Gagnon, chief mining officer at Canadian mining company Bitfarms.
Ben Harper of Luxor Technologies, which offers software services to the sector, said that when the global energy crisis took hold, the price of a crucial ingredient skyrocketed.
The margins on the cost side have been stretched due to the significant increase in power rates that has occurred over the past year, according to Harper.
When things were going well, cryptocurrency mining farms were investing money in more mining computers. The huge and extremely noisy factory that Marketplace visited in Massena, New York was about to have stacks of them installed.
These days, more machines are vying for the same jackpot, said Harper of Luxor. He explained, “Obviously, the more mining on the quantity of fixed coins, the less revenue there is for any miner.
Environmental organisations fighting against energy-intensive cryptocurrency mining have welcomed their collective collapse.
Seneca Lake Guardian, a nonprofit in upstate New York, supported efforts to enact the first statewide partial embargo on new cryptocurrency mining, alleging that such projects conflict with the state’s carbon reduction objectives.
According to Yvonne Taylor, the struggles of cryptocurrency have given her organisation a boost in their battle against a local miner using a fossil-fuel power plant in their area.
Taylor added, “We’ve basically been raising the alarm and shouting our worries at the top of our lungs about this institution for years, so it’s really validating.”
Two Canadian governments, Manitoba and Quebec, are employing various strategies to restrict crypto mining north of the border.
Although there are still certain nations that provide subsidies to miners and there are still some green pastures for miners, crypto investor Bradley Tusk of Tusk Ventures cautions that the sector needs a wake-up call.
They must become considerably more politically savvy. “They’re going to be utterly outlawed from doing what they do entirely if they don’t start to be smarter, more proactive, and more aggressive,” added Tusk.
That applies to cryptocurrency miners as well as the entire sector, according to Tusk. “You’re going to get wiped out if you don’t step up.”
Although there is new legislation to restrict cryptocurrency mining on a national level, Thomas Cmar, a senior attorney at Earthjustice, argues that the fight against the sector has mostly been waged on a state-by-state basis.
They are pursuing electricity costs, according to Cmar. They want to use a lot of electricity at a time when our nation’s climate policies are at stake, regardless of where it is produced.
There is still a lot of cryptocurrency mining activity even after a difficult year, according to Cmar. And many cryptocurrency miners are prepared to pack up and go to another state or province if they lose in one.