A miner reported a $90 million loss after Ethereum switched to PoS
Hive Blockchain reported financial results for the last three months of 2022 and said it received 51.6% less revenue from cryptocurrency mining during that period than a year earlier
Ethereum blockchain's transition to the Proof-of-Stake (PoS) algorithm was one of the reasons for a $90 million loss at major miner Hive Blockchain for the fourth quarter of 2022. The company released its financial results for the last three months of last year, noting that in addition to September's Ethereum update, the losses also contributed to the decline in the price of digital assets and mining equipment late last year.
The Ethereum update, known as the "merger," which moved the altcoin network to the PoS algorithm and stopped mining ETH, occurred in September 2022. Last year's fourth quarter was Hive's first full quarter without Ethereum mining.
The report shows that the miner generated $14.1 million in cryptocurrency mining revenue during that period, down 51.6 percent from a year earlier. And the gross profit earned by Hive from mining in the fourth quarter of last year was $3.6 million, down 77% from $15.9 million in the previous quarter.
According to Miner, the average mining cost per bitcoin in the last three months of 2022 was $13,600, while the average bitcoin price during that time was $18,000. This increased bitcoin production costs by 37% over the previous quarter. The company revalued its mining equipment, which also led to a loss of $38.8 million on Hive's balance sheet.
In addition to the "merger" and the strong decline in cryptocurrency prices from the end of 2021, Hive's earnings were also driven by a significant increase in global hash rates on the bitcoin network and a 60% annual increase in mining complexity, to nearly 40T.
At the same time, the company noted that it mined 787 bitcoins during that period, a 13% increase over the same period in 2021 when 697 bitcoins were mined. According to the Hive team, this reflects continued growth in its operating hash rate.
Hive also reported that the fleet of GPUs formerly used to mine Ethereum is not currently idle but is generating an average annual revenue of more than $1 million by being occupied by computational workloads unrelated to mining digital assets.
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