Bitmain to Turn On $80 Million USD Worth of Bitcoin Mining Devices in China
The crypto bear market has caused a lot of damage to the industry, especially the mining part. Bitmain, which was once hailed as the biggest winner of the crypto market, has certainly suffered a lot because of it.
Now, the new master plan of the company is to deploy around 200,000 units of its own mining equipment in order to mine tokens itself instead of selling the equipment. According to reports, the equipment would cost at least $80 million USD. However, the market is so bad at the time that it might be more profitable for Bitmain to follow this route.
Bitmain is still the largest crypto mining equipment manufacturer of the world right now despite all the issues that the company has been suffering lately. Now, Coindesk has reported on this story and affirmed that its sources affirm that Bitmain will use the electricity costs drop in China this Summer to mine using their own equipment.
Despite the company still being pretty rich, nobody is buying miners right now and this could sunk Bitmain’s business easily if the trend continues. Therefore, it was the perfect time for the company to start with more desperate measures like this one.
Mining farm operators which talked to Coindesk affirmed that 200,000 miners will be deployed to low cost areas in order to use the excessive hydropower created by the rainy season. Sichuan and Yunnan will probably be the two provinces that Bitmain will work on.
At the moment, the company is not necessarily fully decided, but sources affirm that serious talks about being made with farms that will host Bitmain’s equipment.
The new AntMiners S11 and S15 models will be used to mine tokens, as well as some other models like the AntMiner S9i/j. S9 and S11 retail are being sold for $400 and $500 USD online, so it can be profitable to mine tokens.
According to calculations from Coindesk, these machines could bring a revenue of at least $7.7 million USD for the company monthly. This means that in a year they would have basically paid themselves if the prices remained stable.
Bitmain’s Move Will Create Important Market Shift
Last year, around 600,000 Bitcoin mining machines were shut down during the bear market. This kind of shutdown made mining equipments be sold with discounts and it reflected on the hash rate as well.
This has caused some speculation on to what kind of effect the crypto world will see from this event. There are many variables to be considered for this kind of event, since Bitmain plugs and unplugs miners all the time.
What we can tell for sure is that these miners, if they are plugged at once, will have a powerful effect in crypto economy. With the prices of mining being generally calculated at $0.05 USD per kilowatt hour and the special Chinese prices being $0.037 USD per kilowatt hour, this is a great opportunity for Bitmain to profit a lot more.
The Crisis At Bitmain
Proprietary mining, which was once accounted for a significant portion of the company’s revenue, now has shrunk a lot in percentage terms and Bitmain is getting its money from other avenues.
Recent financial results disclosed by the company when it was filing for the Initial Public Offering (IPO) on the Hong Kong Stock Exchange, show that it has dropped from 20% in 2015 to just 3.3% in 2018.
Most of the sales come from selling the mining hardware, which is probably why Bitmain is suffering so much at the moment.
The revenue from sales went from 78% in 2015 to 94% in 2018. However, the company has been struggling to sell hardware during the crypto winter. Since the second half of 2018, Bitmaqin has suffered a net loss of at least half a billion USD, maybe even more.
Now, the company is slowly going back to its roots in an effort to business afloat. Bitmain is far from being as bad as some other cryptos companies, but it looks like the crisis arrived for everyone.