Crypto Mining: Are There Signs of Miners Giving Up?

Crypto Mining: Are There Signs of Miners Giving Up?

The hashrate on the Bitcoin network reached records over the past days, climbing as high as 55 million TH/s. However, prices are hovering dangerously close to breakeven levels, and the social media of the crypto world are seeing regular offers from liquidations of mining farms.

The trend came to a head a few days ago, when the BitPico crypto group announced it is liquidating all its BTC at $8,300, and selling all their mining rigs. Since then, the controversial crypto group has deleted all its tweets, and taken the position that BTC markets and mining are highly manipulated activities:

The behavior of miners in the coming months may point to the direction of BTC prices. Large, early farms that have already paid off may survive longer. But others may see it more profitable to liquidate and buy back during better times.

If miners stay, even for altruistic purposes, this may be beneficial for Bitcoin. But an exodus of miners may be an ominous sign because the biggest advantage of the network - the high security based on the hashrate - is unraveling. The next few months will show if the peak hashrates continue to grow, or the trend turns.

In the case of farm and rig selling, the new buyers may turn into hardware “bagholders”, paying cash for already used, and presumably less efficient rigs. Even at the new lowered prices for the Antminer models, managing a profit from a new farm in a bear market with no end in sight looks like a great risk.

Cloud mining services are also continuously cropping up, despite the fact that those contracts are even more rarely profitable. However, the service sellers are also seeking those who would be ready to pay in advance for an unknown return.

It must be noted that the arms race in SHA-256 mining was much faster compared to the mining growth for Ethereum. In the case of the Ethereum network, the promise of doing away with mining may have stopped the growth.

Not even Ethereum-compatible ASICs were enough to boost the speed of growth. But for BTC, the building of new farms continued at a frenetic pace - and now those farms will have to show they can survive during times of high mining difficulty, a depressed BTC price, and the looming halving of the reward in 2020.

In the case of Bitcoin mining, many believe Chinese miners are decisive in dominating the network, displacing smaller farms. It is hard to foresee if this scenario will play out, but in the coming months, it may lead to a mix of an increasing hashrate, coupled with some of the smaller farms giving up.

Neither the author nor the publication assumes any responsibility or liability for any investments, profits, or losses made as a result of this information. Cryptocurrency trading and investing are risky propositions, and market participants are advised to always conduct thorough research.

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