Bitcoin miners are losing on every coin produced as difficulty drops • Hacker News Board

Re: Bitcoin miners are losing on every coin produced as difficulty drops

#81

Post by londons_explore » Sat, Apr 11, 2026, 3:13 PM UTC

eterm wrote: post #74

didgetmaster wrote: post #67

Earlier quoted context omitted.

It sounds very similar to things like oil production, gold mining, and even farming. When the price is high, everyone wants in on the action. As supply explodes, the prices drop. Once prices get low enough, the costs to pump the next barrel of oil, find the next ounce of gold, or harvest the next acre of a certain crop; exceed the reward. When that happens, wells are shut down, mining operations suspended, and differ…

There's a soft failure-mode for bitcoin where due to the alternating difficulty adjustment, you could end up with people only mining every other 2016-block adjustment. Let's call this cycle A and cycle B. If A is too hard, miners drop out, cycle B gets easier, miners flood back, cycle A gets harder. This results in the hard cycle getting longer and the easy cycle getting shorter. This isn't completely critical as the…

The damping effect is that part of your costs are the hardware, space, depreciation etc. leaving that stuff idle costs money - so it makes sense to mine in the less profitable periods too.

Re: Bitcoin miners are losing on every coin produced as difficulty drops

#82

Post by duskdozer » Sat, Apr 11, 2026, 3:15 PM UTC

KellyCriterion wrote: post #64

klodolph wrote: post #59

Earlier quoted context omitted.

> […] why would they sell bitcoin to continue funding their mining operations […] There are usually some fixed costs involved and you need cash flow. Without cash flow, your business can shut down pretty damn fast. With cash flow, your business can stay around longer, maybe long enough for the economics to shift. This sort of thing happens with oil. There are oil producers which sell at a loss. There was even a brief…

> There was even a brief moment when the price of an oil barrel went negative More accurate: The price for an _option_ to buy/sell oil was negative, not the price of the barrell itself.

How could the option price go below 0? Why couldn't someone just not exercise it in that case?

Re: Bitcoin miners are losing on every coin produced as difficulty drops

#83

Post by red_admiral » Sat, Apr 11, 2026, 3:15 PM UTC

acidphreak2k wrote: post #44

VladVladikoff wrote: post #24

Earlier quoted context omitted.

Seems like you could have made that same bet by just buying BTC with that money and doing twice as good.

Up to a point; once it was over $12k or so, it was cheaper to mine them than to buy them. But yeah, I guess in retrospect I could have just dumped ~$450k into buying BTC when it was at $3,000 and made 3x what I ended up making, but there were other considerations for why I did it at the time. The mining was co-located with my cannabis grow/operations, and in many ways the mining was started secondary to that, even th…

> The [bitcoin] mining was co-located with my cannabis grow/operations

HN quote of the day!

Re: Bitcoin miners are losing on every coin produced as difficulty drops

#84

Post by kristjansson » Sat, Apr 11, 2026, 3:16 PM UTC

KellyCriterion wrote: post #64

klodolph wrote: post #59

Earlier quoted context omitted.

> […] why would they sell bitcoin to continue funding their mining operations […] There are usually some fixed costs involved and you need cash flow. Without cash flow, your business can shut down pretty damn fast. With cash flow, your business can stay around longer, maybe long enough for the economics to shift. This sort of thing happens with oil. There are oil producers which sell at a loss. There was even a brief…

> There was even a brief moment when the price of an oil barrel went negative More accurate: The price for an _option_ to buy/sell oil was negative, not the price of the barrell itself.

No, the price of a contract for future delivery to a specific location went negative just before the delivery date, at a time when there was almost no unoccupied oil storage nor transport capacity at said location.

In that circumstance you might sell your right to some oil for almost nothing rather than deal with the consequences of accepting it. You might even pay someone to take it off your hands.

Options is “right but not obligation”. Physically settled futures are an obligation at maturity.

Re: Bitcoin miners are losing on every coin produced as difficulty drops

#85

Post by xigoi » Sat, Apr 11, 2026, 3:17 PM UTC

raincole wrote: post #70

xigoi wrote: post #61

Earlier quoted context omitted.

Doesn’t that contradict the Wikipedia article? > Miners who successfully create a new block with a valid nonce can collect transaction fees from the included transactions and a fixed reward in bitcoins. To claim this reward, a special transaction called a coinbase is included in the block, with the miner as the payee. All bitcoins in existence have been created through this type of transaction. This reward is halved…

The reward of each block will only get smaller. But the power needs to mine a block is dynamic.

Sure, but that’s not what miners care about. The power needed to get a given amount of money doubles whenever the reward is halved.

Re: Bitcoin miners are losing on every coin produced as difficulty drops

#86

Post by arbuge » Sat, Apr 11, 2026, 3:21 PM UTC

dmk wrote: post #7

The headline is dramatic but this is literally how bitcoin is designed to work. Miners leave, difficulty drops, costs go down, mining becomes profitable again. The interesting part isn’t the loss per coin, it’s how long the lag between unprofitable mining and difficulty adjustment keeps forced selling pressure on the market.

I'm far from a crypto expert but aren't costs largely GPUs and electricity here?

Those are now being driven by massive AI demand and are likely to remain so for the forseeable future. So how would costs go down?

Re: Bitcoin miners are losing on every coin produced as difficulty drops

#87

Post by vardump » Sat, Apr 11, 2026, 3:23 PM UTC

arbuge wrote: post #86

dmk wrote: post #7

The headline is dramatic but this is literally how bitcoin is designed to work. Miners leave, difficulty drops, costs go down, mining becomes profitable again. The interesting part isn’t the loss per coin, it’s how long the lag between unprofitable mining and difficulty adjustment keeps forced selling pressure on the market.

I'm far from a crypto expert but aren't costs largely GPUs and electricity here? Those are now being driven by massive AI demand and are likely to remain so for the forseeable future. So how would costs go down?

I don't think GPUs are competitive at all. You need specialized mining rigs with bitcoin mining specialized chips.

Re: Bitcoin miners are losing on every coin produced as difficulty drops

#88

Post by KellyCriterion » Sat, Apr 11, 2026, 3:25 PM UTC

kristjansson wrote: post #84

KellyCriterion wrote: post #64

Earlier quoted context omitted.

> There was even a brief moment when the price of an oil barrel went negative More accurate: The price for an _option_ to buy/sell oil was negative, not the price of the barrell itself.

No, the price of a contract for future delivery to a specific location went negative just before the delivery date, at a time when there was almost no unoccupied oil storage nor transport capacity at said location. In that circumstance you might sell your right to some oil for almost nothing rather than deal with the consequences of accepting it. You might even pay someone to take it off your hands. Options is “right…

Thanks for correction, that is true!

(Both instruments are not that popular in my country, so my daily language is to put both of them as synonym, while they are different animals in some details)

Re: Bitcoin miners are losing on every coin produced as difficulty drops

#89

Post by patapong » Sat, Apr 11, 2026, 3:29 PM UTC

dmk wrote: post #7

The headline is dramatic but this is literally how bitcoin is designed to work. Miners leave, difficulty drops, costs go down, mining becomes profitable again. The interesting part isn’t the loss per coin, it’s how long the lag between unprofitable mining and difficulty adjustment keeps forced selling pressure on the market.

But mining costs are (cost of equipment+cost of electricity)/total coins mined, so can miners not end up in a situation where they need to keep mining to pay off equipment despite the individual coins being unprofitable?

Re: Bitcoin miners are losing on every coin produced as difficulty drops

#90

Post by vaelin » Sat, Apr 11, 2026, 3:30 PM UTC

arbuge wrote: post #86

dmk wrote: post #7

The headline is dramatic but this is literally how bitcoin is designed to work. Miners leave, difficulty drops, costs go down, mining becomes profitable again. The interesting part isn’t the loss per coin, it’s how long the lag between unprofitable mining and difficulty adjustment keeps forced selling pressure on the market.

I'm far from a crypto expert but aren't costs largely GPUs and electricity here? Those are now being driven by massive AI demand and are likely to remain so for the forseeable future. So how would costs go down?

The cost of finding a block goes down because it becomes less difficult.

The goal in proof of work is to find a block hash less than a given value. That value is determined by the network difficulty. The lower the value, the more difficult it is to find a block, and thus the more expensive it will be to mine.

Difficulty is adjusted once every two weeks to target an average block time of 10 minutes. If the average block time during the preceding 2 weeks is less than 10 minutes, it means that blocks were too easy to find (i.e. the difficulty was too low relative to total hash rate of the network). Conversely, if the average block time was greater than 10 minutes, the difficulty was too great.

This is how it the network has maintained a roughly 10 minute block time as the hash rate of the network has grown over the past 16 years. The difficulty (i.e. cost) of finding a block is constantly being adjusted.