The Bitcoin mining industry is seeing blood in the streets because the Bitcoin mining hash rate has declined from peaks near 60 EH/s to around 40 EH/s today, driven by Bitcoin’s decline from $20,000 to less than $4,000 in a year.

This means 20 EH/s of Bitcoin mining equipment has been taken offline due to lack of profitability. Bitcoin mining rig manufacturers have large quantities of rigs they cannot sell, bringing the mining arms race of constantly improving technology to an abrupt halt.

Bitmain, the biggest Bitcoin mining rig manufacturer, has gone from planning an initial public offering (IPO) on the Hong Kong Stock Exchange to slashing most of its workforce. GMO Internet, an up and coming manufacturer that developed 7 nm rigs faster than anyone else, has put up the white flag of surrender and left the mining industry.

It is clear that the IPO for Bitmain will not be happening. This company is struggling for survival. Essentially, Bitmain is laying off all employees who are not essential and getting rid of auxiliary divisions.

Entire departments will be closed. A Bitmain staff member said ““It’s affirmative. The layoff will start next week and involves more than 50 percent of the entire Bitmain’s headcount” while another staff member said, “Some departments have to be let go entirely.”

It is likely that the blockchain and artificial intelligence (AI) departments at Bitmain will be most severely impacted since Bitmain’s true business is manufacturing mining rigs, and anything which is not yielding profits will be the first to go.  

Meanwhile, up and coming mining rig manufacturer GMO Internet is completely getting rid of its mining manufacturing business. It will be reporting an “extraordinary” total loss of JPY 35.5 billion ($319 million) from the mining business.

GMO Internet will no longer manufacture, develop, or sell mining rigs. It will continue an in-house mining operation with its remaining rigs, and this might be profitable even in bad market conditions since they have highly efficient 7 nm rigs.

The fact that GMO Internet has a surplus of 7 nm rigs and cannot even sell them shows how bad the mining industry has gotten. Miners cannot afford to buy any more rigs, no matter how cutting edge the rigs are, since the entire mining business model has been rekt.

The only way for Bitcoin mining to work, even during favorable mining conditions, is to run rigs 24/7 without interruption. Then miners buy more rigs from their slim profit margin. More than 30 percent of all existing rigs being turned off due to lack of profitability indicates most mining businesses are taking big losses rather than profits.

Simply, miners will not be buying new rigs until the 20 EH/s of rigs that have been turned off can be turned back on, and Bitcoin’s price will have to double to make that happen.