Bitcoin miners hit hard by the cryptocurrency’s crash may be throwing in the towel.

The bitcoin network’s hash rate, one way of gauging the computing power dedicated to mining the digital currency, dropped about 24 per cent from an all-time high at the end of August through Nov. 24, according to Blockchain.com. While the decline may have partially resulted from miners switching to other cryptocurrencies, JPMorgan Chase & Co. says some in the industry are losing money after bitcoin’s price tumbled.

“This suggests that prices have declined to a point where mining is becoming uneconomical for some,” JPMorgan strategists led by Nikolaos Panigirtzoglou wrote in a Nov. 23 report, in reference to the falling hash rate.

Bitcoin miners, who perform the computations necessary to confirm transactions in the cryptocurrency, are rewarded for their efforts with bitcoins. If prices suffer a sustained drop below miners’ breakeven costs (determined by their electricity bills, mining-rig efficiency, and other factors), they may be forced to shut down to avoid operating at a loss.

The break-even cost to mine a single bitcoin using Bitmain’s Antminer S9 rig was estimated at US$7,000 in a Nov. 16 report by Fundstrat Global Advisors, though the level is probably lower for some miners with access to cheap electricity and equipment. Bitcoin, which has tumbled about 80 per cent from its December peak, was trading at US$3,912 as of 5:35 a.m. New York time on Monday.

A big miner shakeout could be bad news for chipmakers including Taiwan Semiconductor Manufacturing Co. and Nvidia Corp. who supply the industry, along with mining-rig designers like Bitmain Technologies Ltd. that are pursuing initial public offerings.

Still, there’s a silver lining for miners who survive the drop in prices, notes Ryan Rabaglia, Hong Kong-based head trader at OSL, a cryptocurrency dealing firm. As weaker hands leave the bitcoin network, the difficulty of mining the cryptocurrency declines. A cull could ultimately benefit the survivors, assuming Bitcoin’s price doesn’t fall too fast.

--With assistance from Matt Turner