A Research Says Almost 100,000 Bitcoin Miners Have Been Shut Down Due To Plunging Bitcoin Prices
Undoubtedly, the current ailing market conditions of Bitcoin (BTC) in terms of its price point is having a massive toll on the miners’ profitability. According to Autonomous Research LLP. Fundstrat Global Advisors LLC, at least 100,000 individual miners have shut down and around 1.4 million servers have been unplugged since early September.
Bitcoin miners, who perform the complex calculations to generate the digital currency are facing troubles as the foremost cryptocurrency keeps dipping. Their profit percentage has marginally inclined towards the loss, which pushes them to close shop.
Malachi Salcido, the head of Wenatchee, a Washington-based Salcido Enterprise said:
“We are entering in the phase when there’s a flushing out of the market. There will be relatively few operations that come out the other side.”
Most miners only start earning profits when BTC crosses the $4,500 mark and since Nov.19 the token hasn’t closed above that level. Only a few players in the market could now afford to stay in the game either miners with scale or very specific business models or extremely low electricity costs.
All’s not bad for big miners
Notably, Salcido claims to be one of the largest miners in North America with 22 megawatts of power deployed and 20 megawatts more being built. Based out of Douglas County, Washington states that margins have dropped from about 40% to 20%. However, according to Salcido, shutting down of smaller rivals did push the margins back up to 40%.
The mining power of the hash rate on the bitcoin network has also seen 36% fall from its all-time peak this August. According to Lex Sokolin, the London-based global director of fintech strategy at Autonomous, this has further profited the remaining mining rigs to earn Bitcoins as the problem-solving difficulty has dropped about 10%.
As illustrated above, the big miners aren’t that deep in the muggy waters, however, the subsequent consolidation will increase risks for investors and others vested in the network’s success. According to Ryan Selkis, co-founder of crypto researcher Messari, there’s a higher chance that these companies, who will be controlling the mining could band to execute a so-called 51% attack. The controlling miners can reverse transactions and stop new ones from confirming, making off with billions in other people’s money.
The 51% attack have already been faced by Blockchains supporting much smaller coins like Bitcoin Gold and ZenCash. The attacks have had costed the investors millions of dollars. Such scenario can affect the token in long run hampering with the network’s use and growth. According to a Fundstrat note published last week.
“We note that the BTC price would need to re-accelerate substantially for mining to once again become self-funding, as it has been for most of Bitcoin’s history.”
While Salcido is managing to survive the bear run, all thanks to its business model, everyone could not. The company owns all its rigs rather than hosting other miners and pays about 3 cents per kilowatt-hour or half of what miners pay in China.
China-based Bitmain Technology Ltd, one of the industry’s biggest miners, shifted its base and just opened a 30,000-unit facility with 12 megawatts of mining power in East Wenatchee, Washington. Another competitor GigaWatt, declared bankruptcy while owing millions to creditors. GigaWatt hosted small miners, and as a result, took only a share of the mining profits, this clearly worked in their favour during the current market squeeze.
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