There is a persistent story told by many tour guides in Tombstone that the mines closed when they hit water. That is simply not true. The first mine to hit water was the Sulphurett at about 520 feet. After that mine hit water, the engineers from the various mining companies got together and decided that what they would do is bring in large water pumps to remove water from the deepest shaft, the Grand Central. It was believed that if they could remove the water from the deepest shaft, it would lower the water table in general and, consequently, also drain the other mines. That plan worked.
The pumps, though, required constant maintenance, and that became a problem. The worst incident was when the pumps at the 1000-foot level of the Grand Central mine were filled with bad fuel. That fuel caused the pumps to seize; but by then, mining was becoming economically unfeasible. Rather than repair those pumps, the owners decided to let the lower levels flood and continued to mine only above the 500-foot level.
So why did the mines close? This answer starts all the way back with the founding of the United States. From the beginning, the federal government used a “bi-metalic standard” for the US dollar, both gold and silver. Over time, though, that standard seemed to shift with changing administrations, sometimes gold and sometimes silver. The Coinage Act of 1873 embraced gold and de-monetized silver. Then the Bland-Allison Act of 1878 required the US Treasury to purchase domestic silver bullion to mint coins. The mines in Tombstone were just beginning in 1878 so they reaped the benefit of the Bland-Allison Act. Also, in 1878, the United States began to issue silver certificates that were based on the amount of silver held in the treasury. These were boom times, indeed, for the Tombstone mines.
The Sherman Silver Purchase Act of 1890 required the government to purchase 4.5 million ounces of silver every month, which was used to mint silver dollars and back silver certificates. Unfortunately, that led to overvalued silver prices and undervalued gold prices, so metals investors began to buy silver and exchange that silver for gold and then sell the gold for more than they had paid for the silver. They then repeated that process until the United States was in danger of running out of gold, so in 1893, President Cleveland repealed the Sherman Silver Purchase act.
Between 1878, when mining started in Tombstone, and 1900, the price of silver changed from $1.16 per ounce to $0.62 per ounce, about half of the starting price. At that rate, the mines could no longer produce a profit for the investors, so they began to close.
So, the answer to the question about why the mines closed is as simple as the federal government’s manipulation of the price of silver. At one point, silver simply became too cheap to be worth mining.