The decrease in the price of Bitcoin has not affected the process of digital currency mining
Mining Bitcoin and other types of Digital currency follows a complex trend. This trend has created an unpredictable economy that works contrary to predictions in different situations. The complexity of this economy is characterized by the combination of factors such as the decrease in the price of digital currencies and the increase in the hash rate (specifying the power required for mining). The increase in the hash rate shows that bitcoin mining is still profitable for the market participants. . In fact, they are still operating in the industry unaffected by the recent downturn. Contrary to reasonable predictions, this action shows that Bitcoin mining has entered a new stage of complexity after the 1400% increase in the price of this cryptocurrency last year.
- 80 percent of 21 million bitcoins have been mined
- Will the mining process emerge as a profitable independent service? >
The dramatic increase in the price of Bitcoin in 2017 made new digital currency miners enter this market and mine this digital currency with any possible means. In the meantime, the big actors were also encouraged to increase their power and buy more advanced equipment, and by the way, by reducing the price to six thousand dollars and relying on their equipment, they eliminated the novice actors from the competition.
Marco Strong >, the CEO of Genesis Mining believes that progress in digital currency mining, especially Bitcoin, continues strongly. From his point of view, this expansion compensates for the departure of small, low-yield miners.
As you know, new bitcoins are created by computers competing to solve complex mathematical equations. Solving these equations will reward the owners of those computers with bitcoins. As the processing power of these computers increases, the number of calculations required to produce new coins also increases. This process makes it impossible to monopolize Bitcoin mining in the hands of limited miners.
Competition to obtain the latest technologies available in this field increased to such an extent that digital currency miners became the main customers of giants such as Nvidia and similar companies. With the increase of developments in this field, currency mining became an industrial nature and big companies such as Bitmain and Bitfury were born from it.
In the past, the increase in hash rate had a relative relationship with price changes; But this connection was never direct and predictable. Theoretically, an increase in the hash rate should also increase the price of the digital currency; Because the cost required to produce tokens (coins) has increased. In addition, the processing power has increased in recent times, and the reason for this is also the development and improvements of the past. Medat says:
The increase in the hash rate means that people with long-term goals have entered the digital currency mining industry. In fact, cryptocurrency miners are content to hoard the resulting assets, and even a price drop won’t change their minds.
Numerous analyst groups attempt to determine the break-even price for Bitcoin miners. At this price, mining and selling Bitcoin will have almost equal costs. Among these analysts, Fundstrat Global Advisors estimates the price at eight thousand dollars. Morgan Stanley believes that a price of more than $8,600 is economically viable for miners, and Coinshares estimate was $6,400. Of course, with the current price of around $4,000, it seems that miners will have to wait more time to make a profit.
These figures and predictions will change depending on the efficiency of the miners’ equipment. The equipment manufacturers of this process have the most access to the necessary hardware for mining. As a result, they set the price of the products for their highest profit.
The clear point is that the happy and highly profitable era of digital currency mining is over for now. In recent months, some shared mining services have fired low-performing users and semiconductor product manufacturers have also experienced declining sales. In the end, it seems that this process will remain only in the domain of big companies and their serious competition. Finally, it should be mentioned that the increase in the processing power of products and the easy access of digital currency miners to energy cheap or free electricity also make the mining process somewhat cheaper.