Clem Chambers, who is the CEO of a private investor’s website ADVFN.com, recently wrote about the falling rewards for Bitcoin mining in a Forbes. He suggested that falling prices of cryptocurrencies is leading to miners leaving the industry as the business becomes less profitable for them.

Miners get “mining rewards” for solving computer puzzles that unlock a “block” on a blockchain. For each block processed by a miner, a reward of 12.5 Bitcoins is paid.

Miners can also get a transaction fee for the block, which could be about 2 BTC. The overall reward for the miner is 14.5 BTC that roughly translates to around $94,000 if 1 BTC is approximately equal to $6,500.

Miners do not just care about the 14.5 BTC; they also have to worry about the fiat equivalent of their coins. They pay energy bills in fiat and, because of this, the price of BTC in fiat needs to be high enough to make these payments.

While the cost of electricity is stable, the price of their BTC rewards is falling consistently. This instability is stressful for miners.

Additionally, mining difficult has been increasing consistently, which means more effort is needed to mine a block. Also, Bitcoin halves mining rewards periodically. Chambers argued that the next halving could arrive in under two years, making mining even more unprofitable.

He stated:

“With so many variables at play, the real ‘mining reward’ that matters is how much money you are going to make mining, and I denominate that not in BTC or altcoins mined but in dollars and that depends on a confluence of coin market price and the power of your mining rigs. This income will fluctuate dynamically.”

Chambers also suggested that a bullish market helps in earning more rewards for the same efforts. However, in a slumping market, the income will sag.

He wrote:

“Mining is real, costs money, takes effort and skill and can’t be faked. As such it is a solid signal of what is going on under the hood of the market.”

Previously, OnChain Capita founder Ran Neu-Ner said that mining costs would outweigh profits at around $5,000. He noted:

“That’s where the miners look at this and go: ‘Is it actually worth keeping the machine on?’ Then we may see a very different game in mining.”

Crypto Mining Profits Plummet, ADVFN CEO Says was originally found on [blokt] - Blockchain, Bitcoin & Cryptocurrency News.

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