Fluctuations in the prices of Bitcoin (CRYPTO: BTC) only affect investor sentiment in the short term and do not impact miners’ profitability. That's according to BitPatagonia chief technical officer Nick Damico.
“Bitcoin's price changes and fluctuations in the short run affect investor sentiment more than anything else," Damico told Benzinga. "But being in it for the long term, it doesn't really affect miner profitability."
However, the decline in BTC prices has had an impact on the entire crypto sector. The profitability of bitcoin mining is still low, requiring different operators to adjust their strategies.
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BTC Mining Revenue Down More Than 50%
According to Blockchain.com, as of Aug. 31, the total revenue generated by bitcoin miners was $18.97 million, a 12-month low and a 50% decrease from the $41.66 million reported on Sept. 1 last year.
In terms of annual revenue, mining income peaked on Oct. 25, 2021 at $74.41 million, during the height of the bull run for BTC.
When asked what steps are being taken by miners to stay relevant in the industry, he said large miners keep holding their BTC and leverage it to be able to buy more miners and expand their operations.
“We consider that the relation between the amount they were holding and how leveraged these companies were is disproportionate. And that's what's causing the crisis that large miners are having right now or public miners are having right now. Right now, there's no change in our tact," he explained. "Time will tell in the next few months what the idea would be to be able to stay relevant in the public market."
China’s Loss, North America’s Gain
China’s ban on BTC mining in 2021 led to an influx of investments in North American countries, Damico says.
There were places that did not have any business earlier or had a smaller industrial business and with this opportunity, they managed to grow a lot.
Renewable Energy Sources
BTC mining is energy intensive and therefore should be regulated, the CTO said. Miners are looking for green energy constantly and are injecting new funds to stimulate the renewable market, he added.
“So we see it as a win compared to traditional markets where we were using energy that wasn't renewable,” he said.
While BTC mining will stay profitable in the long run, a lot of factors, including growth, industry players and the supply chain, will determine how profitable the industry will be.
“Right now, there are only two large competitors when it comes to Bitcoin miners, which would be Bitmain and Whatsminer," he said. "I think it would be fantastic for the market to have new players, manufacturing miners."
Hash Rate Difficulty
Damico added that he sees the difficulty for the hash rate will continue to increase in the future and that he saw no reason for it to cool off.
“Chances are, like any other business, the more efficient miners are the ones that are going to stay in the game and stay more profitable. That's all that matters to us," he said.
Damico also expects the bear market to continue for at least a few months and that the industry scenario will determine the course of the price action.
