The end of 2018 was not very successful for the mining industry. Immediately, two companies announced a decrease in activity. First, GMO Internet Group announced the termination of the issue of ASICs. And then Bitmain announced a significant reduction in staff. What will it lead to, and what should miners expect in 2019?
GMO Internet Group, a large Japanese corporation, began actively receiving advancement in the cryptocurrency market as early as 2017. During this time, it made a huge investment in creating its own farms, then organized the production of ASICs. This allowed it to quickly take a leading position in the industry, helped by access to the resources of the parent company.
However, the fourth quarter of 2018 radically changed the situation. GMO Internet Group reported a loss of $ 320 million. To avoid their growth, it was decided to completely stop the production of mining equipment. However, the corporation does not leave the blockchain industry. Its farms continue to work. At the same time, plans were announced to transfer them to regions with cheaper electricity.
Almost simultaneously, a message came from a former competitor, a clear industry leader Bitmain. Here it was decided to make a major reduction in personnel, and even close the research unit in Israel.
What conclusions can be drawn from this news? Apparently, equipment manufacturers no longer believe in the rapid rise in the price of cryptocurrency, and this is obvious. However, it should be recognized that the currently available computing power is more than covering the needs of existing blockchains. Thus, the bitcoin network's hashrate has decreased by one third in recent months. At the same time, users did not feel any deterioration in the processing of transactions.
That is, there is a normal process of finding a balance between supply and demand. Bitmain and GMO Internet Group will need only a few months to re-launch production. It is much more profitable to take a pause, rather than wait for the rise in Bitcoin prices in the near future.