Bitcoin Miners Must Get Savvy And Crafty To Survive The Crypto Market Collapse Of 2018
Is It Possible For Bitcoin Miners To Survive The Bear Market?
During 2017 and part of 2018, the Bitcoin mining industry expanded all over the world. New companies entered the space and many others started to purchase Bitcoin mining hardware. However, not all of them were able to survive this bear market.
Bitcoin reached $20,000 in December 2017. Many other virtual currencies reached their all-time high in January 2018. This created a perfect situation for new miners to start profiting from this price increase in most of the digital assets available in the market. Nevertheless, since that moment, Bitcoin lost more than 80% of its value. Other assets lost more than 95% of their value.
Since January until August, Bitcoin’s hash rate increased by 313% moving from 14 million TH/s to 61 million TH/s. However, since that moment, Bitcoin’s hash network lost around 48% reaching 31 million TH/s a few weeks ago. Now, Bitcoin’s hash rate is 37 million TH/s.
According to FT, Bladetech, a firm that emerged earlier this year, has put its plans on hold due to the correction experienced by the space. The company wanted to create the largest Bitcoin mining facility in the United Kingdom.
The founder and chief technical officer at Outlier Ventures said that Bitcoin’s current price close to $4,000 has severely damaged miners in the space. Some miners have been mining virtual currencies even when they registered loses during the last few months. One of the companies that has also been affected by this bear market was Bitmain. Bitmain is the largest crypto mining company in the space.
According to BitMEX Research, the company had to sell part of its mining equipment at a loss during this year. Apparently, the company had too many miners in its inventory.
BitMEX Research on the matter:
“This analysis implies Bitmain are currently loss-making, with a negative profit margin of 11.6% for the main S9 product and a margin of over negative 100% on the L3 product. In reality costs are likely to have declined so the situation may not be as bad, however, we think it is likely Bitmain are currently making significant losses.”
Smaller companies and miners are those experiencing the biggest losses in the market. Indeed, several companies will not be able to generate profits at all with this bear market. However, difficulty rates adjust automatically, something that would allow new miners to enter the space after being outside the market for some time.