Author Questions What Happened To The Upstate New York Bitcoin Mining Gold Rush Going Bust?
NY’s Bitcoin Mining Industry Has Been Massively Affected By The Ongoing Crypto Winter
One of the most striking characteristics of the towns/cities located around upstate New York is that the energy being supplied to these areas is extremely cheap to procure. Owing to the abundant hydro power that is supplied to the region by local dams, many residents are able to obtain large amounts of renewable electricity at very affordable rates.
As a result of these subsidized electricity costs, many crypto miners established their rigs in these regions during the crypto boom of 2017/early-2018 — thereby increasing the power supply demand in the area and spiking distribution costs.
A Closer Look At The Situation
In wake of this growing problem, a host of local municipalities such as Lake Placid passed a bill to stop any crypto mining activities from taking place within the upper reaches of NY. However, as per a judgment passed by the New York State government a few months back, power supply agencies should not ban crypto miners, instead, they can charge them extra for electricity— so as to offset costs for local residents.
As a result of these increasing power costs as well as bearish market conditions that have been in place for the past 14 months or so, many of these miners have had to pack up their operations and sell most of their machinery.
As per a recently published article in a local newspaper, Coinmint is the only altcoin mining operator still working within the NY state area. To be even more specific, it is being reported that the firm has two of its wings in Plattsburgh and has another branch that is scheduled to open shortly in Massena. Not only that, but the firm is also looking to launch its ICO in the near future.
Bitcoin Mining Is A Dying Industry
New York is far from being the only place to have witnessed a massive drop in its crypto mining-related activities, since, reports seem to suggest that mining numbers all across the globe have dropped drastically over the past 6-8 months.
At this point in the article, it can be of some use to bring up the concept of “network difficulty”. In its most basic sense, we can think of ‘network difficulty’ as being a good way of assessing the “number of miners and hash power available in relation to a network”. To put it even more simply, the larger the number of miners within a particular network, the more hash power the network uses.
As can be seen from the chart above, over the course of the past six months, the price of Bitcoin and its associated ‘network difficulty’ value have run almost parallely.
Lastly, it should be pointed out that the latest batch of Bitmain miners have quite a lot of questionable aspects about them. For example, the firm is allegedly offering its latest mining rig to the public at a highly reduced cost-price. Not only that, their “7 nanometer chips” appear to be largely non-viable— despite the fact that many recent stories claim that the cost for producing these chips is nearly 300% of what the previous 15 nanometer chips were made for.
Other Key Points Worth Bearing in Mind
- Established crypto networks such as Ether and Monero still rely quite a bit on GPU mining.
- The GPU mining industry is largely dependant on the innovation of companies such as Nvidia and AMD.
In rounding off this piece, it is worth remembering that except during bull runs, the mining market at large remains as a largely low-margin investment. It now remains to be seen what the future has in store for this space.