BTC Block Reward Miners Are Reeling as the Token’s Fiat Price Suffers Its Biggest Drop Since the ‘Crypto Winter’ of 2022

BTC block reward miners are reeling as the token's fiat price suffered its biggest drop since the 'crypto winter' of 2022

Bitcoin (BTC) block reward miners are facing difficulties as the token’s fiat price experienced its steepest decline since the crypto winter of 2022, having severe implications for the future security of the blockchain on which the token resides.

Crypto tokens crashed hard over the weekend and into Monday as a downward trend that prevailed for the past week accelerated sharply. The community identified a number of culprits, including the U.S. market-maker Jump Trading abruptly selling significant token volumes into thin liquidity; Japan’s hiking of interest rates leading to the unwinding of the yen carry trade; fears of a U.S. recession following a disappointing jobs report; and the newly pro-crypto Donald Trump’s path to the White House looking far less certain since incumbent Joe Biden handed his electoral baton to VP Kamala Harris.

Amidst all this carnage, the fact that BTC suffered a far greater price decline than traditional stocks and physical gold could prove the final nail in the coffin for BTC’s digital gold mantra. Despite being pitched as a safe haven in times of financial turmoil, BTC’s house of cards has been well and truly exposed as a fraud.

It’s particularly bad timing for U.S. Sen. Cynthia Lummis (R-WY), who just days before the crash, released a draft of her bill to establish a multi-billion dollar strategic reserve of BTC that would “serve as an additional store of value to bolster America’s balance sheet.” Given that BTC’s fiat value fell by more than one-quarter in just the past week, we’re left wondering whether Lummis typed ‘bolster’ when she really meant ‘demolish.’

A week ago, Trump pledged his own form of BTC-based strategic reserve, prompting rapturous cheers from crypto bros, who seemed to forget how they once celebrated the cryptic headline that Satoshi Nakamoto embedded in the Bitcoin genesis block 15 years ago. That headline, about governments bailing out struggling banks, was supposed to indicate the weakness of fiat currency. Now? Bail BTC out, big government… Please?

It’s probably a good thing that Monday’s scheduled virtual meeting of crypto execs and White House officials was postponed. The meeting, organized by Rep. Ro Khanna (D-CA), was supposed to focus on nudging the Democratic party away from its perceived anti-crypto stance and encouraging a less restrictive attitude that would see digital assets more firmly integrated with traditional finance. Good luck with that.

Crypto-focused stocks like Michael Saylor’s MicroStrategy (NASDAQ: MSTR) and the Coinbase (NASDAQ: COIN) digital asset exchange tanked in pre-opening trades, with MSTR being down nearly 30% at one point. It probably didn’t help that last week Saylor announced yet another stock dilution plan—this one a $2 billion’ equity offering program’—to buy even more BTC.

Crypto-focused exchange traded funds (ETFs) also took a pounding from the start of Monday’s trading, as investors weren’t able to make any moves on the weekend while the funds’ underlying assets were being set on fire.

The stocks of publicly listed BTC block reward miners like MARA (NASDAQ: MARA) (formerly Marathon Digital), CleanSpark and Riot Platforms (NASDAQ: RIOT) all took double-digit tumbles on Monday morning. While they clawed back some of these losses before the bell rang, none of them finished in the black. So, it’s this aspect of the current debacle that this article will focus upon.

Mining red ink

BTC miners were already struggling due to the recent halving of the block rewards, making a high token price crucial to sustaining miners’ ability to turn a profit. But BTC’s mining difficulty hit a new all-time high last week, meaning it now costs even more to compete for the right to mine a new block.

Miners relying on aging hardware are at a particular disadvantage in this fight, as their rigs continue to devour expensive electricity without a decent shot at the reward that comes from mining a new block. This struggle was on full display in the Q2 reports of publicly traded mining groups, including two of the trio mentioned above.

CleanSpark won’t report its latest quarterly results until later in the week, but Riot Platforms said it generated revenue of $70 million in the three months ending June 30, while booking a net loss of $84.4 million. That loss would have been worse were it not for the nearly $14 million in ‘power credits’ it received from public utilities in the states in which it operates.

MARA didn’t perform any better, reporting revenue of $145 million and a net loss of just under $200 million, much of that via the ‘fair value’ decline of the more than 20,000 BTC tokens it holds. Despite this impairment, MARA recently announced that it had made “a shift in our treasury policy and adopted