Bitcoin Mining Facility Shut Down Following Sharp Decline In Miner Profitability
Bitcoin mining has been seeing a decline in profitability in recent times. This comes as no surprise given the drop in the value of the token and since profitability largely depends on what price BTC is trading at, it has led to a decline in cash flow. As the ripple effects of the market crash become apparent, the first victims of the decline in profitability have begun to emerge as a bitcoin mining facility has been shut down.
Compass Mining Loses Facility
Compass Mining is one of the leading bitcoin miners in the space and has been operating to great success until the crash of last month. This crash had left a lot of miners scrambling to sell their holdings in order to continue their activities and some have been forecasted to go bankrupt in the coming months if the low prices persist. However, it seems it is starting early for Compass Mining which has now lost one of its facilities.
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On Monday, Dynamics Mining took to Twitter to announce that it was terminating its hosting contract with one of the miners. In the tweet, it named Compass Mining and alleged that the mining company had failed to pay the agreed-upon power consumption charges for the facility.
Interestingly though, it would seem this was not a recent problem for Compass Mining as Dynamics Mining has alleged that it had received six late payments and three non-payments so far. It is also said to have failed to pay the monthly fee and has not made payments since February 1st, 2022 which was before the latest market crash.
BTC trading above $21,000 | Source: BTCUSD on TradingView.com
The hosting company stated that Compass Mining has used a total of $1.2 million in power consumption costs but had only paid $415,000 and $250,000 in initial power deposits. Additionally, Compass had claimed that they had paid Dynamics but the hosting companies say that they had instead used the money to build out their facilities.
For clarity @compass_mining power consumption @Dynamics2k totaled $1.2 million and they only paid $415k and $250k initial power deposits. Compass claims that they gave money to @Dynamics2k but the money was used to build out their facilities. #truth pic.twitter.com/9esvuCFulO
— DynamicsMining (@DynamicsMining) June 27, 2022
Bitcoin Miners Not Doing Well
Along with the decline in bitcoin mining profitability, the mining company stocks have been taking a hit due to their close ties to the price of bitcoin. Last week would prove to be a bloody market for them as most mining companies had recorded losses in their stock prices.
The largest of these companies such as Marathon Digital Holdings and Riot Blockchain had seen some of the highest declines with -5.78% and -7.68% respectively. It has also dragged down its market cap and has received less attention from investors.
Related Reading | Ethereum Energy Consumption Sees Sharp Decline As Mining Profitability Drops
Others such as BiT Mining and Iris Energy had however gone against the grain in this regard. They were among the only few mining stocks to see positive returns for last week and went as high as double-digit green figures for the seven-day period. It came out to 11.82% for BiT Mining and 12.13% for Iris Energy.
The largest drop for the week was seen in Core Scientific which lost 12.92% of its value and is now sitting at a market cap of $592.237 million. The fall in stock prices also followed the decline in bitcoin’s price which had fallen below $21,000 during the weekend.
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