China Crypto Mining is Catching Its Second Wind, Bitcoin Miners Adapting in the Hunt for Power Savings


Chinese Bitcoin mining community is back in action again, buying second-hand mining equipment and making deals with hydroelectric power plants in order to cash on the abundant water supply during the summer would hopefully reduce the energy consumption costs for the miners.

2018 marked the longest crypto winter forcing many individual miners to shut their operations and sell their mining rigs at dirt cheap rates. With an abundance of water supply this summer, the northeastern provinces of China which include Sichuan and Yunnan are expected to generate excess electricity. When the electricity production is more than the demand, the prices get lower too, and this would serve as the perfect rare opportunity for the miner community in China to generate some profit even amid the declining market prices.

To give you a perspective on the importance of low electricity cost and its impact on the miner community, Hashage, a mining farm operator in China runs a total of six mining farms with a slot for 20,000 machines has said that the electricity cost from hydroelectric plants during summer comes on an average of $0.037, per kilowatt hour (kWh) for hosting equipment for miners. Making it extremely favorable for the miners to run their heavy rigs round the clock.

The mining farms around the country, as well as the individual miners, have already started to assemble their resources, as the summer is nearing. The CEO of Hashage has said that during the summertime the demand is as high as 1 million mining machines are in operations. He also mentioned that he is in talks with several mining farms and individual miners who are looking to set up their mining rigs. While big farms are looking to host thousands of mining rigs, the individual miners are also expected to host hundreds of them.

Amid the current bearish trend in the crypto trade market, even a difference of few cents can make a great impact on the final profitability. Take an example of a mining farm which operates around 10,000 machines. A cost reduction for $0.045 on electricity charges on each machine can result in a cost saving of around $13,500 a month for the whole mining farm. A significant difference indeed.

The increase In Demand Of Second Hand Mining Rigs

With the electricity available in plenty and at a very cheap price, the demand for the second-hand mining rigs has also exploded in the country. Mind you the same miners who are aggregating the second-hand rigs to multiply their mining capability, were forced to sell their rigs against the weight as the bear markets were at its peak.

With the summer nearing and deals with the hydroelectric powerplants all set to be finalized by the March-end, the next important resource is mining rig. A new latest mining rig can cost you anywhere from hundreds of dollars to even thousands if you pick the best available. However being an epic center for miners, China also has a great second-hand market for mining rigs, where you can buy a second hand AntMiner S9s can be bought for around $150 depending on the level of damage in the machine. An AntMiner S9s is capable fo processing a trillion hashes per second.

An original Antminer S9 is currently listed for $450 on the parent website Bitmain, however, the second-hand market is listing the used S9s for between $100 to $200. One of the founders of the mining pool located in China was quoted,

“S9 is now like the AK-47 [assault rifle] in ASICs, It now has the best performance over cost ratio in the market.”

He also projected that the number of mining rigs operating in the region during the summer could easily reach upward of 1.5 million. He also revealed an interesting agreement deal between mining pools and power plants, where the mining pool buys out around 80% of the energy production before the mining season begins, and they have to pay the agreed amount whether they can manage to use the reserved electricity.

Bear Market Brings In A Ton Of Uncertainty

Despite the abundance of cheap electricity available, the bear markets bring in a ton of risk along, which makes all these early summer mining preparation an uncertain bet. What if the market value takes another slump if that happens even near-free electricity supply won’t make the operations profitable.

F2pool, the fourth largest mining pool releases various reports and indexes on the mining process. According to its estimation if the mining farms are using Antminers S9s with an average electricity cost of $0.05 per Kwh, then the market would incur huge losses if the prices of bitcoin fall below the $3,000 mark.

Another major issue with a place with such vast mining operations is the absence of regulations to protect the miners against cheating from the organizers of the mining pool. One such example comes in the form of mining farms switching the machines for their own mining instead for the contributors. One such mining farm switched the operation for their own benefits for two hours late at night and the users could not do much about it.

Many crypto miners in the country believe there is no hardbound rule to prosecute bad actors and mining farms making false claims to lure the customers. One such farm attracted many customers on the claims of ultra-cheap electricity cost, but as soon as the customers came in and the farm was set, they jacked the prices.

One of the mining farm operators was quoted,

“This industry is always about making a bet after all. There are always risks from multiple aspects, especially from the markets side in this bearish time.”

Conclusion

The abundance of cheap clean electricity available in China makes it a perfect place for running mining operations in the country. However, running a mining operation during the bearish trend especially for an entity as volatile as cryptocurrencies are just another bet, as the marginal profit that the cheap electricity promises can be nullified if the prices go any lower than its current value.

Mind you the same bearish trends had forced many Chinese mining operators to shut down because the cost of running a mining operation was exceeding the profit generated from those operations. Even in the current scenario, most of the assumptions are made on a large scale, i.e if someone runs thousands of machines simultaneously then they can hope to generate some profit if everything goes as presumed.

If you are remotely related to the crypto trade market, you would know that there is almost no space of preassumptions and the price volatility makes it almost impossible to predict the trends.

https://bitcoinexchangeguide.com/todays-coin-price-watch-btc-eth-xrp-and-bch-cryptocurrency-chart-predictions/

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