BTC Plummets, Mining Hardware Struggles: Chip Makers Face Deeper Losses

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The cryptocurrency market’s prolonged downturn has cast a dark shadow over the mining ecosystem. Since mid-November, Bitcoin has repeatedly hit its lowest levels since September 2017, dragging down major altcoins and plunging the entire digital asset market into what many are calling a “crypto winter.” As prices collapse, miners—once the backbone of blockchain networks—are shutting down operations in droves. With mining profitability evaporating, ripple effects are now crippling upstream suppliers, especially mining chip manufacturers.

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The Collapse of Mining Profitability

Bitcoin’s 2018 performance has been nothing short of brutal. From its all-time high near $19,300 in December 2017, the flagship cryptocurrency plunged to below $3,625 by late November—marking a staggering 67% decline within a single year. On November 14, BTC traded at $6,417; by November 25, it had dropped to $4,342, then crashed further below $3,625 just hours later. By November 27, it hovered around $3,766, down nearly 7% in 24 hours. Global market capitalization shed $7.5 billion in a day, with trading volumes shrinking by almost $2 billion.

This sustained bear market has devastated miners who rely on block rewards and transaction fees to cover electricity, hardware, and operational costs. When the revenue from mining falls below the cost of running equipment, miners face a harsh reality: power down or lose more money.

According to F2Pool—one of the world’s largest Bitcoin mining pools—between 600,000 and 800,000 miners have already ceased operations since mid-November. This mass exodus is reflected in declining network hash rate data from blockchain.info, which shows Bitcoin’s total computational power falling from 47 EH/s on November 10 to 41 EH/s by November 24, a 13% drop in just two weeks.

To put this into perspective: at its peak on October 4, Bitcoin’s network hash rate reached approximately 74.54 EH/s. Using the Antminer S9—a once-popular ASIC miner with a 13.5 TH/s output—as a benchmark, that peak equated to over 5.5 million S9 units running simultaneously. The recent decline suggests more than 2.3 million S9-equivalent machines have now gone offline.

The Human Cost of the Mining Downturn

The pain isn’t just technical—it’s deeply personal for those who invested heavily during the 2017 bull run.毛世行 (Mao Shixing), founder of F2Pool and co-founder of Cobo Wallet, described the current climate as “the most painful period for mining.” He highlighted the breakneck pace of technological advancement: a DCR miner purchased for over $1,500 with 2.4 TH/s performance becomes obsolete within months when newer models offer 6 TH/s or even 45 TH/s at similar or better efficiency.

“Back in early 2017, a Bitcoin miner cost over 20,000 RMB,” Mao noted. “Today, the same secondhand machine sells for just a few hundred yuan.”

Many miners who expanded operations during the boom are now facing severe financial strain. Preliminary estimates suggest the average miner lost around $10 million in 2018, factoring in sunk costs from hardware purchases, facility rentals, and energy contracts.

Chip Manufacturers Reel from Slumping Demand

While miners absorb immediate losses, semiconductor companies that supply mining hardware are feeling long-term consequences. The collapse in demand for GPU- and ASIC-based mining rigs has left chipmakers with bloated inventories and shrinking margins.

Nvidia, a dominant player in graphics processing units widely used in early-stage crypto mining, reported disappointing results in its Q3 2018 earnings. Despite overall revenue growth of 21% to $3.18 billion and net income up 47% to $1.23 billion, forward guidance sent shockwaves through markets: Nvidia projected Q4 revenue at $2.7 billion**, far below Wall Street’s expected **$3.4 billion.

The culprit? Lingering inventory of older Pascal-architecture GPUs originally targeted at cryptocurrency miners. Nvidia’s chip stockpile ballooned from $1.09 billion to **$1.42 billion** in just one quarter—a clear sign of evaporating demand.

Following the report, Nvidia’s stock plunged nearly 17%, wiping out over $23 billion in market value—its worst single-day drop in over a decade. Analysts widely interpreted this as confirmation that the crypto mining-driven GPU boom was officially over.

Earlier in August 2018, Nvidia had already slashed its cryptocurrency-specific business after mining-related chip sales plummeted by 94% quarter-over-quarter. While overall revenues exceeded expectations, digital currency-focused sales fell from an anticipated $100 million to just **$18 million**.

The Shift from GPUs to ASICs and Market Realities

Mining technology has evolved rapidly—from CPU-based mining to GPU farms, then FPGA setups, and now Application-Specific Integrated Circuits (ASICs). These specialized chips offer vastly superior performance per watt, making them ideal for energy-intensive proof-of-work algorithms like Bitcoin’s SHA-256.

Companies like Bitmain, Canaan Creative (Avalon), Ebang (Ebit), Bitfury, and GMO Internet have become central players in this new era. On November 9, Bitmain launched two new 7nm ASIC miners—the Antminer S15 and T15—with claimed efficiencies far exceeding older models.

Initial website reports showed the S15 (priced at ¥11,400) selling out in five minutes and the T15 (¥7,000) within 50 minutes. However, industry insiders question whether these were genuine sales or marketing tactics designed to project strength amid weakening fundamentals.

👉 See how next-gen mining tech is redefining efficiency and competitiveness in today’s harsh market.

Many active miners say they have no intention of upgrading. With Bitcoin prices so low, even cutting-edge hardware fails to generate enough profit to justify replacement costs. As one miner put it: “Why buy a new machine if it won’t pay for itself before the next halving or price crash?”

Bitmain’s own Asia-Pacific sales lead, Fan Xiaojun, admitted on November 21 that miners are struggling to sell their products—a stark contrast to the frenzied buying seen earlier in the year when Bitcoin approached $100,000 RMB (~$14,500 USD).

FAQ: Understanding the Mining Market Crash

Q: Why are miners shutting down operations en masse?
A: When Bitcoin’s price drops below the “shutdown price” of a miner—where electricity and maintenance costs exceed block rewards—operators lose money with every block mined. At current levels, even efficient rigs like the Antminer S9 operate at a loss.

Q: How does declining hash rate affect Bitcoin’s security?
A: A lower hash rate reduces network security temporarily by making 51% attacks slightly more feasible. However, Bitcoin’s difficulty adjustment algorithm automatically recalibrates every 2,016 blocks (~two weeks), restoring equilibrium as surviving miners regain profitability.

Q: Are ASIC manufacturers still profitable?
A: While companies like Bitmain benefit from proprietary chip designs, falling demand and rising competition mean margins are under pressure. Some are exploring pivots into AI chips or cloud services to diversify revenue.

Q: Will mining recover without a price rebound?
A: Not significantly. Mining is inherently tied to cryptocurrency valuations. Until prices rise or transaction fees increase substantially post-halving, most marginal miners will remain offline.

Q: What role do energy costs play in mining viability?
A: Energy is typically 60–80% of mining expenses. Miners in regions with sub-$0.03/kWh electricity can survive downturns longer than those paying $0.10+/kWh.

Q: Is GPU mining completely dead?
A: For Bitcoin, yes—ASICs dominate completely. But GPUs remain viable for certain ASIC-resistant coins like Ethereum (pre-PoS), Ravencoin, or Ergo.

Industry Uncertainty and Strategic Shifts

With mines closing, machines idle, and chip inventories piling up, the mining sector faces unprecedented uncertainty. Once seen as a path to quick wealth, mining is now recognized as a highly cyclical business with razor-thin margins during bear markets.

Even industry giants like Bitmain are reconsidering their futures—exploring artificial intelligence chips and other semiconductor applications beyond crypto.

As volatility persists and institutional adoption remains cautious, only the most efficient and well-capitalized players will survive this winter.

👉 Learn how leading innovators are adapting to survive—and thrive—in the evolving crypto landscape.

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