Although the cryptocurrency markets have slightly recovered following massive sell-offs in mid-March, Bitcoin’s (BTC) faltering price has led to notable miner instability and closures.
Soon after Bitcoin dropped below the $4,000 threshold on March 13, DPW Holdings, a Nasdaq-listed holding company, announced that it is temporarily shutting down its cryptocurrency mining business, Digital Farms.
DPW notifies the SEC about multiple changes to its business in relation to the coronavirus
According to a March 18 business update filed with the United States Securities and Exchange Commision (SEC), the Digital Farms’ suspension comes alongside other closures and changes at DPW in response to the COVID-19 pandemic.
However, while changes at other businesses at DPW are directly connected to the impact of COVID-19, Digital Farms is said to be suspended due to Bitcoin’s recent price crash. The filing reads:
“Digital Farms’ cryptocurrency mining operations have been suspended indefinitely, primarily due to the sharp decline in the market price for Bitcoin.”
Formerly known as Super Crypto Mining, Digital Farms is a wholly owned crypto mining subsidiary of DPW. As reported by Cointelegraph, Digital Farms deployed DPW’s own mining hardware, AntEater, which was developed in collaboration with tech giant, Samsung. In May 2019, Digital Farms acquired a 617,000 square foot facility in the U.S. to increase overall mining profitability by gaining access to 28 megawatts of power and an infrastructure to support up to 300 megawatts.
Digital Farms on hold 60 days before the next Bitcoin halving
Digital Farms’ suspension announcement came just about 60 days before the next Bitcoin halving in May — one of the most anticipated events in the crypto community, which will see mining rewards cut by 50%. Taking place once every four years, the Bitcoin halving has historically led to significant growth in Bitcoin’s price. However, some crypto players believe that the next Bitcoin halving will have little-to-no impact on Bitcoin’s price.
Though some factions of the crypto community were anticipating Bitcoin to surge amid the upcoming halving, Bitcoin experienced exactly the opposite trend in March 2020. On March 13, Bitcoin’s price “halved” its price instead, dropping to as low as $3,600. At the height of the crash, the coin’s daily losses amounted to over 50%.
A number of miners apparently shut down operations due to unprofitability after the crash
The massive drop of Bitcoin subsequently led to significant miner instability as mining became unprofitable. This forced a number miners to remove their hashing power from the network, blockchain analytics firm Glassnode reported. Similarly, Chinese mining pool, F2Pool, also reported on March 12 that Bitcoin’s daily mining revenue was suffering more losses than during the price lows of November and December 2018.
When some miners retreated due to unprofitability following the crash, Bitcoin experienced its second-largest historical drop in difficulty ever. According to Glassnode data, Bitcoin’s difficulty — a measure that indicates the time taken by miners to add new transactions to the Bitcoin network — dropped almost 16% on March 25. While some industry players think that downward difficulty adjustment completes the so-called “miners’ capitulation cycle,” others are confident that such events mark a bottom in the market.
As of press time, Bitcoin is trading at $6,652, up about 0.2% over the past 24 hours, according to data from Coin360.