Despite data showing that the price of Bitcoin (BTC) may have fallen to the point of being unprofitable for the average miner, Marathon Digital Holdings says it will continue to work to accumulate the leading crypto asset.
Charlie Schumacher, vice president of corporate communications at Marathon Digital, told UKTN on June 15 that while the company “isn’t immune to the macro environment”, it is “pretty well insulated and well positioned” to weather the current downturn, due to low operating costs and fixed electricity pricing.
“For reference, in the first quarter of 2022, our cost of producing one Bitcoin was around $6,200. We also have fixed prices for electricity, so we are not subject to changes in the energy markets. »
Schumacher added that the company has focused more on its Bitcoin production and accumulation of the crypto asset, with the belief that the asset will continue to appreciate over the long term.
“Because we present our financial statements in USD, the price of Bitcoin will always have a significant impact on our financial results. To objectively assess our progress internally, we try to focus more on our production of Bitcoin. It is important to keep keep in mind that Bitcoin mining is a zero-sum game,” he added.
“It’s true that Bitcoin is worth less in dollar terms at the time it’s mined, but if you believe in Bitcoin’s ability to appreciate over the long term, earning more BTC is never a bad thing.”
In a June 9 statement, Marathon said it has been hoarding or “hoarding” its Bitcoin and has not sold any since October 2020. As of June 1, 2022, Marathon held approximately 9,941 BTC, which is worth approximately $200 million. at current prices.
— Marathon Digital Holdings (@MarathonDH) June 9, 2022
In fact, Schumacher pointed out that as the price of Bitcoin decreases, the number of people who can continue to mine profitably also decreases, which will force inefficient miners out and also reduce the difficulty of mining new ones. blocks.
“As the difficulty rate decreases, those who are able to continue mining have the opportunity to earn more bitcoins.”
Bitcoin’s current hash rate, also known as Bitcoin’s processing power, has dropped from an all-time high (ATH) of 231.428 EH/s on June 12 to 205.163 EH/s at the time of writing.
A more pronounced effect occurred a year ago after China’s crackdown on cryptocurrency mining facilities fell from a market peak in the hash rate of 180.666 in May 2021 to 84. .79 in July 2021.
The price is the average cost of mining
Last week, crypto market data and analysis platform CryptoRank pointed out that on June 16, the price of BTC was on par with the average cost of mining, noting that for some it might even be unprofitable to operate at the moment.
#BTC Price drop to average cost of mining
— CryptoRank Platform (@CryptoRank_io) June 17, 2022
Markus Thielen, chief investment officer at digital asset manager IDEG Singapore, told UKTN there could be some fallout from the mining industry as most had set their budgets in Q4 2021, before conditions changed. of the market.
“We actually anticipate there will be some fallout as most miners seemed to set their 2022 budgets early in the fourth quarter of 2021 and market conditions have changed significantly.”
Thielen said they estimate that many of the smaller miners that don’t have economies of scale will break even at around $26,000 to $28,000. Bitcoin is currently priced at $20,085 at the time of writing.
Related: Bitcoin heads for dismal weekly close as BTC price rejects at $20,000
Last week, a report by S3 Partners identified Marathon Digital Holdings as one of the US-listed companies with the greatest interest from short sellers alongside MicroStrategy and Coinbase.