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Mining industry after the end of the cryptocurrency winter

04/29/2019
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  • Mining_cryptocurrency
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Long-term finding of the cryptocurrency price at the minimum values adversely affected the manufacturers of mining equipment. The industry leader Bitmain suffered the most. In order to survive the winter cryptocurrency, it even had to use non-standard methods of making a profit.

The complexity of the mining industry during the cryptocurrency winter

Founded in 2013, Chinese Bitmain Technologies Ltd very quickly managed to become a leader in the production of mining equipment. It not only produces ASICs, but also itself is engaged in the extraction of cryptocurrency. In the winter of 2019, the company announced plans to place 200,000 devices in the Chinese provinces with the lowest electricity prices.

In the fourth quarter of 2018, Bitmain registered a net loss of $ 500 million. At the same time, it owns cryptoactive assets totaling more than $ 700 million at prices beginning in 2019.

Now Bitmain owns the two largest pools for the mining of cryptocurrency, but over the past year the share of its pools has decreased from 53% to 39%. That is, the company struggles through a cryptocurrency winter, which forces it to seek additional funding. In addition, the fall in demand has led to lower prices for the equipment itself.

Private mining in winter cryptocurrency

In a better position were private miners. Of course, the cost of production primarily depends on the price of electricity in the region. But after the fall in prices for ASICs, this business again became profitable. Thus, Antminer second-hand equipment from the 9th and 15th series in the secondary market costs up to $ 2,000. At the same time, the manufacturer is forced to reduce prices for new equipment, which leads to paradoxical situations.

ASIC miners of the 17th series cost from $ 1270 to $ 2000, and the 7 nm chip used in them gives an increase in energy efficiency by 20-30% compared to previous versions of the equipment.

At the beginning of growth in the price of cryptocurrency, those miners who are not in a hurry to sell the extracted asset benefit the most. The fact is that with an increase in value, complexity also increases. That is much more profitable to work for the future. Already, the yield of one device of the previous generation comes to $ 50 per month.

Mining prospects for a private investor

There is a possibility that lawmakers from the PRC are preparing a solid surprise to all the miners. The National Development and Reform Commission of China (NDRC) issued a proposal to ban the mining of cryptocurrency within the country. If this happens, the industry will face revolutionary changes. Of course, Bitmain can move its farms to other countries. However, there is no guarantee that it will be able to get cheap electricity.

More than 50% of the computing power of the Bitcoin network is accounted for by miners from China. In the event of a ban, there will be a global change in the cryptocurrency mining system.

However, owners of bitcoins and other tokens should not be afraid for their assets. The blockchain automatically adjusts the level of difficulty and reward, so there will always be those who want to conduct a transaction. At the same time there will be positive moments. Network stability may even increase due to decentralization and more users.

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