Bitcoin Price Crash Influences Crypto Miners Decision To Shut Down Or Sell Off Equipment

Bitcoin Price Crash – Are Miners Shutting Down And Selling Off Equipment?

Bitcoin’s recently crashing price has not only affected the price of other altcoins, it’s also having a spillover effect on miners who seem to be jumping ship.

This is coming on the heels of a new report stating that the bitcoin network’s hash rate has experienced a 24 percent drop, compared to the high hash rate levels seen in the last 90 days.

This has further fueled the speculations that bitcoin miners might be moving to mining other cryptos instead of bitcoin.

In fact, recent estimates have shown that mining bitcoins isn’t profitable anymore, considering that the energy, equipment and other costs required to mine 1 BTC is now about double its market rate –costs over $7,000 in utility charges to mine 1 BTC which is now fluctuating between $3500 and $3900.

JP Morgan’s Nikolaos Panigirtzoglou reiterated this in a recent report where he said:

“This suggests that prices have declined to a point where mining is becoming uneconomical for some.”

With miners dependent on the reward for each block mined, if the price of bitcoin continues to fall, even more miners may be forced to abandon the network as they would be operating at a loss for prolonged periods.

They would need to do this if their costs consistently outweigh the rewards. Break even costs often include cost of mining rigs, utility bills and a few other things. While the break even cost for mining 1 BTC is around $7,000 in high electricity tariff locations, areas with cheaper electricity tariffs and equipment's might attract a cheaper break even cost.

Bitcoin’s prices have consistently fallen in the last few weeks, causing it to lose about 80 percent of its value since the beginning of the year, and bringing it to the lowest it’s been in 14 months.

The fallout of miners shuttering their businesses and walking away could cripple the Nvidia Corp’s and Taiwan Semiconductor Manufacturing Co.’s business and IPO efforts, as these companies depend on revenue from crypto miners.

While this sure does look like a string of bad news, there’s some good news for dogged investors who are willing to take some risks. These investors can profit from the current mayhem. According to Hong Kong based OSL head trader, Ryan Rabaglia,

“As weaker hands leave the Bitcoin network, the difficulty of mining the cryptocurrency declines. A cull could ultimately benefit the survivors, assuming Bitcoin’s price doesn’t fall too fast”

Rush To Sell Off Mining Equipments

Bitcoin’s rapidly decreasing value has resulted in many miners quickly selling off their mining rigs –often for about 5 cents on the dollar.

In fact, a recently circulated picture of mining rigs just sitting and collecting dust without being out to use, has further triggered concerns about the state of the industry –particularly regarding mining.

These fully functional machines are being sold to buyers for a fraction of their prices. Price inquiries about mining hardware across multiple stores have shown that these are often deeply discounted and available to buyers.

The fast dropping hash rate across board is largely indicative of miners bailing and getting out of the mining business.

An excellent example of this is Long Blockchain Corp, a company that switched from its iced tea business to crypto mining, at the end of last year, and then backtracked when the price of crypto started falling.

Of course, their actions resulted in a lower than acceptable market cap, resulting in them being delisted from the NASDAQ stock exchange.

While many mining pools are fast shutting down and taking their business elsewhere, smart investors who are willing to take bold risks can get these equipments at ridiculously low rates, and then cash in when the market rebounds.

Bitcoin soared to incredible heights last year, when it peaked at $20k. Its downward spiral is cause for some serious concern, and has had some industry experts giving controversial projections about the future of bitcoin and the cryptocurrency industry as a whole.

Of course, it is also possible that these happenings will force investors and developers to focus on more rewarding, longer lasting projects that will have actual use cases and solve real problems instead.

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