Bitcoin (BTC), Cryptocurrency–As prices for Bitcoin continue to slip to their lowest point in over a year, with all eyes on BTC hitting $3,000, a recent inquiry into the dipping hash rate has led some to question the health of the crypto mining industry.
On Nov. 25, a tweet went viral showing hundreds of crypto mining rigs essentially collecting dust–flipping the narrative on the energy hungry machines grinding away 24/7 and posing a crisis to the environment. Rather than out of a philanthropic dampening by eco-conscious owners, the formerly profitable crypto rigs were reported being sold in loads for just pennies on the dollar, a reflection of have far cryptocurrency has fallen over the last two weeks and throughout 2018.
While some originally denounced the photo, claiming that it was doctored propaganda to add fuel to the dumpster fire of the crypto markets, EWN previously reported on other outlets expressing a similar experience witnessing mining rigs for sale at discount prices. With cryptocurrency prices reaching their lowest point in 2018, with no end in sight except for a possible bottoming out at $3000, newcomers to the industry and/or those looking to profit through mining alone are now closing shop–which may end up benefiting crypto in the long run.
As reported by Bloomberg, the falling rate of Bitcoin’s network hash rate is a straightforward method for evaluating the computing power dedicated to the currency. Since peaking at an all time high for hash rate in August, the computing resource has fallen 24%, mirroring the slumping valuation of the coin to a lesser degree.
While some of the dipping hash power is indicative of miners jumping ship in search of more profitable crypto mining, it also points to a general selling out for rig-owners who are no longer able to profit from the slumping price of Bitcoin, through a combination of costly power bills and the initial cost of purchase for rigs that were a hot commodity just months ago. According to the report by Bloomberg,
“The break-even cost to mine a single Bitcoin using Bitmain’s Antminer S9 rig was estimated at $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.”
The falling demand for costly mining rigs has Nvidia the hardest in the traditional sector, with revenue projections and overall outlook for the world’s largest chip manufacturer falling precipitously in the final quarter of the year. However, the dipping interest in crypto mining, particularly for those overbought on rig equipment could prove to be beneficial for the industry in the event of a recovery.
Since reaching a fever pitch last December, which saw Bitcoin hit $20,000 on the tail end of a bull run, the industry of cryptocurrency has become inundated with short-term players looking to capitalize on the excitement without contributing to the overall development. No more of an egregious example exists than Long Blockchain Corp, the iced-tea making company which shifted gears to pursue cryptocurrency mining–in addition to a change in company name–following the bull run of last December. However, as crypto prices subsequently crashed, the company was forced to backpedal and find a more profitable avenue than mining, a turn of events which culminated in the corporation being delisted by NASDAQ due to low market capitalization.
While investors fret over the dismal outlook for Bitcoin and altcoin prices, there could be a silver lining in the form of less scrupulous parties being weeded out of the industry.