Data shows the Bitcoin mining bear market has a ways to go

Bitcoin (BTC) mining is the backbone of the BTC ecosystem and miners’ returns besides supply penetration into BTC’s terms movements and the wellness of the wider crypto sector.

It is well-documented that Bitcoin miners are struggling successful the existent carnivore market. Blockstream, a starring Bitcoin miner precocious raised funds astatine a 70% discount.

Current mining enactment shares similarities to historical BTC carnivore markets with a fewer caveats.

Let’s research what this means for the existent Bitcoin cycle.

Analysis shows that based connected erstwhile cycles the carnivore marketplace whitethorn continue

Bitcoin mining profitability tin beryllium measured by taking the miner’s gross per kilowatt hr (kWh). According to Jaran Mellerud, a Bitcoin analyst for Hashrate Index, a BTC mining carnivore marketplace has a sustained play of gross per kWh of little than $0.25. Under his assumption, helium calculates utilizing the astir businesslike Bitcoin mining instrumentality connected the market.

The 2018 carnivore marketplace lasted astir a year, sending kWh to a bottommost of $0.12. Following the downtrend, a abbreviated bull marketplace commenced until the 2019 carnivore marketplace began.

According to Mellerud, the 2019 carnivore marketplace produced all-time debased gross per kWh of $0.083 and lasted 463 days, portion Bitcoin terms dropped to $5,000.

The astir caller mining carnivore marketplace started successful April 2022 according to Mellerud’s investigation of gross per kWh. As of Dec. 8, the existent carnivore marketplace has lasted for 225 days with a minimum gross of $0.108 per kWh. The fig is higher than successful erstwhile carnivore cycles owed to precocious vigor prices.

Bitcoin mining humanities gross per kWh. Source: Hashrate Index

Comparing the existent carnivore mining cycles, a minimum of 138 carnivore marketplace days whitethorn proceed earlier the marketplace turns. The quality betwixt this play and past cycles is that previously, miners were chiefly self-funded whereas now, determination are galore miners that funded their accelerated maturation with debt.

Public mining stocks consciousness the pain

At its peak, Bitcoin mining stocks reached a cumulative worth of implicit $17 cardinal successful the 2021 bull market. The bull marketplace accrued capitalist involvement and spurred maturation successful BTC mining stocks skyrocketed from $2 cardinal successful Nov. 2020.

After reaching the bull marketplace highest successful 2021, crypto mining stocks are nether immense pressure, with galore falling by 90%.

Bitcoin mining stocks full marketplace cap. Source: Hashrate Index

The immense magnitude of indebtedness taken connected by nationalist mining firms taken astatine Bitcoin’s all-time precocious is creating a monolithic debt-to-equity ratio.

Mirror, reflector connected the wall, who are the strongest nationalist #bitcoin miners of them all? pic.twitter.com/pnpypsxcAu

— Jaran Mellerud (@JMellerud) December 5, 2022

A large illustration of however the carnivore marketplace is expanding miners’ reliance connected debt, is to look astatine Core Scientific. Before the mining carnivore marketplace successful April, Core Scientific had a specified 0.6 debt-to-equity ratio. Since the commencement of the carnivore market, that fig has grown to implicit 24.2 debt-to-equity.

Core Scientific debt-to-equity. Source: Hashrate Index

With the Bitcoin mining carnivore marketplace expected to proceed based connected past historical BTC trends, much nationalist miners volition look equity squeezes. As miner indebtedness continues to grow, investors whitethorn get spooked, creating adjacent much depressed prices successful the banal market.

The views, thoughts and opinions expressed present are the authors’ unsocial and bash not needfully bespeak oregon correspond the views and opinions of Cointelegraph.