Bitcoin Mining Difficulty Dropped

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Bitcoin Mining

Bitcoin miners are in a bind due to the declining value of bitcoin and rising costs associated with mining. As miners turned off their computers to avoid losing money in the brutal bear market, the difficulty of mining a bitcoin block decreased by 7.32 percent today.

According to the BTC mining pool’s data, the decrease at block height 766,080 is the largest one since July 2021. After China outlawed cryptocurrency mining, hordes of miners suddenly stopped using the network. This country was the primary location for bitcoin mining at the time.

To keep the time it takes to mine a Bitcoin block relatively constant, the mining difficulty automatically adjusts to the online hashrate: The greater the number of miners, the greater the difficulty.

Bitcoin miners have been squeezed over the past few months by the combination of a low bitcoin price that reduces their revenue and high electricity rates that increase their costs. Core Scientific (CORZ) and Argo Blockchain (ARBK) are two major manufacturers experiencing liquidity issues; meanwhile, Compute North has filed for Chapter 11 bankruptcy protection.’

Bitcoin Mining

The situation has been made worse by the arrival of new, more powerful machines and the addition of miners as projects begun months ago came to fruition and increased the hashrate. Both the hashrate and the difficulty were increased by about a third between early August and the last upward adjustment on November 21.

It appears that the crypto winter’s reality has finally set in, as bitcoin miners are switching off their rigs. Around the middle of November, as profitability began to decline, the hashrate began to drop. Nonetheless, the current level is much higher than it was before China began cracking down on the sector.

According to Luxor’s hash price indicator, mining profitability has decreased by around 20% over the past month.

Currently, “even miners using energy-efficient machines like the Antminer S19j Pro need access to electricity priced lower than $0.08 per kWh,” as one Luxor analyst put it. According to Mellerud, many miners are paying between $0.07 and $0.08 per kilowatt hour (kWh), even though the network average is closer to $0.05.

On top of that, the cost of energy and natural gas has been on the rise over the past few days. “Miners buying spot electricity and already operating close to break-even may have seen electricity prices rise just enough to flip their operations into cash-flow-negative territory,” Mellerud said.

The network is not more susceptible to attack as a result of the most recent decrease in hashrate and difficulty. Data from BTC.com shows that the processing power is distributed among five large mining pools and another 12 smaller ones.

Iris Energy, a bitcoin mining company, is being sued for defaulting on $103 million in equipment loans

In the absence of a debt restructuring agreement with the lender, the company has announced that it will go into default on the debt on Tuesday.

Bitcoin Mining

On Monday, Bitcoin mining company Iris Energy (IREN) revealed that it was being sued by its lender over allegations that it had defaulted on $103 million in equipment loans held by two SPVs.

According to a filing with the U.S. Securities and Exchange Commission made on Monday, the lender sent the miner a notice of default on November 4 due to the company’s failure to engage in “good faith restructuring discussions” for the debt in question. Lender claims Iris defaulted on payments due on October 25 because it did not participate in such discussions, according to a filing made on Monday. The lender seeks to accelerate the loan, which means it wants the entire principal plus interest due right away, according to the filing. According to an Iris statement, the company “disagrees” with the lender’s claims in the Nov. 4 notice.

The bitcoin mining hardware in question, Iris Energy said on November 2nd, does not generate enough cash to cover the related debt obligations. Company officials previously stated that it would be unable to meet the debt obligations held by the two SPVs if discussions to restructure the debt did not result in an agreement by November 8.

According to the business, the 1.6 exahash/second (EH/s) and 2.0 EH/s of mining hardware are backing the $32 million and $71 million in loans, respectively, as of September 30. Since the debt is held by two non-recourse special purpose entities (SPVs) that are wholly owned by Iris Energy, the lender cannot take any assets of Iris Energy other than the collateral in the event of default.

It would appear from previous press releases that the loans came from the troubled lender NYDIG.

During this bear market, Iris Energy is just one of many bitcoin mining companies that is having trouble meeting its financial obligations as a result of falling bitcoin prices and rising energy prices. Compute North filed for Chapter 11 bankruptcy in September, and other major companies like Core Scientific (CORZ) and Argo Blockchain (ARBK) appear to be on the brink of insolvency.

The Monday filing also includes a notice of possible event of default for a third $1 million loan held by a wholly owned SPV and secured by 0.2 EH/s of miners.

Default and foreclosure of assets are likely if a debt restructuring agreement is not reached by Tuesday, when Iris Energy said it would stop providing financing support to the SPVs.

The company’s machines can only operate at a steady 2.4 EH/s because of the equipment loans.

Late Monday morning, Iris shares were trading at $2.80, up slightly from their opening price of $2.75.

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