The impacts of a massive drop in the price of bitcoin and other cryptocurrencies is spreading, as crypto mining companies began shutting down operations and declaring bankruptcy Thursday.
Cryptocurrency mining is a process that involves using computing power to process transactions on a blockchain in return for the issue of a given cryptocurrency. In the case of bitcoin, which has a finite amount that can be issued, the process becomes harder over time and requires more computing power.
Whereas once bitcoin could be mined from a basic personal computer, the process now involves dedicated miners using powerful computer that are both expensive and power-hungry. Therein lies the problem: When bitcoin drops below a certain point, mining ceases to be profitable.
Over the past month, Bitcoin and the crypto-money market in general had gone rather crushing. The contraction of the crypto money market and the reasons were discussed for a long time, while some investors said that by the end of next year, Bitcoin would reach a range of 15-20 thousand dollars.
F2pool founder Mao Shixing, who interviewed CoinDesk, said that Bitcoin miners are no longer interested in this. Comparing the Hashrate ratios and drawing attention to the decline here, Shixing said it is no longer profitable because of the average digging time of old machines. (Hashrate is the average number of inferences made by a Bitcoin miner over a certain period of time. This is usually a one-minute period criterion so that everyone’s performance can be compared equally.)
According to data from blockchain.info, the worldwide hash rate has fallen by 13 percent in the last two weeks.
According to Mao, the miners who left work were old models such as T9 + or AvalonMiner 741. According to F2pool’s miner’s earnings index , these producers are currently hurting.
What Happened to Crypto Coins?
According to Mao, there are many reasons for the problem. The first and most important reason for this is, of course, the bifurcation of Bitcoin Cash. The second reason is the winter season in China, which hosts many miners. The doubling of electricity bills in winter and the decline in Bitcoin have made old systems unable to compete with new ones.
Mao also thinks that the mills have not completely abandoned Bitcoin mining. Mao believes that when the Bitcoin market, which has a dynamic structure, increases, and the summer months come, the machines will be plugged in again.