Ethereum Price Extends Slide as ETH Mining No Longer Profitable

Ethereum’s slide accelerated on Wednesday, with prices falling below $200 for the first time in 11 days as crypto markets booked heavy losses across the board. A profit crunch in the ether mining business is also adding to the growing headache over the protocol’s future.

ETH/USD Update

Ether’s price has declined sharply in the last few hours, more than offsetting a stable overnight session that saw values hold relatively steady. Over the past 24 hours, Ethereum has dropped 9.4% to $189, according to CoinMarketCap. That’s the lowest level in over a month. The selloff was accompanied by a notable uptick in daily trade volumes, with more than $1.7 billion worth of ETH trading hands on virtual currency exchanges. BitForex, LBank and ZBG were the biggest markets for ETH trades.

The value of ether also fell sharply against bitcoin. At the time of writing, ETH/USD was priced at 0.0311, down 5.1% compared with Tuesday.
At current values, Ethereum has a total market capitalization of $19.8 billion, which is roughly $1 billion higher than XRP, the third largest cryptocurrency by market cap.

Mining Ethereum No Longer Profitable

The business of mining ether and other cryptocurrencies using graphic processing units (GPUs) is no longer profitable, according to analysts at Susquehanna, a global quantitative trading firm.

In a note to clients, the firm said mining ether using high-priced GPU cards produced zero profits as of November. Last summer, mining a single unit of ether generated $150 in profit. Ether’s year-long bear market and the substantial drop in the network’s hash rate have contributed to the dwindling profit margins. In general, higher hash rates boost miners’ incentive for finding the next block.

As one might expect, declines in the crypto-mining business have negatively influenced sales at leading GPU makers. Nvidia Corp, a leading chipmaker, has seen its cryptocurrency-related revenue plunge by $100 million quarter-on-quarter. According to Susquehanna, Nvidia’s crypto-related revenue in Q3 is “likely close to zero.”

“We estimate very little revenue from crypto-related GPU sales in the quarter, consistent with management’s prior commentary that they were including no contribution from crypto in their C3Q18 outlook,” Christopher Rolland said in the note, as quoted by CNBC. “3Q18 mining profitability continued to decline, as Ethereum prices have fallen more than -70% since the beginning of 2018.”

The crypto market downturn has forced Nvidia to pull out of the mining business. Colette Kress, Nvidia’s CFO, acknowledged earlier this year that the company now expects “a negligible contribution” from cryptocurrency-specific products going forward.

As Hacked reported in the spring, Nividia’s first-quarter chip sales to crypto miners reached $289 million, far exceeding estimates.

Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

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Chief Editor to and Contributor to, Sam Bourgi has spent the past nine years focused on economics, markets and cryptocurrencies. His work has been featured in and cited by some of the world's leading newscasts, including Barron's, CBOE and Forbes. Avid crypto watchers and those with a libertarian persuasion can follow him on twitter at @hsbourgi