A major blow has been dealt to crypto miners in the current bear market. This has affected both large-scale and small-scale miners alike. It is especially so for major miners who have invested millions of dollars to mine while profits are dropping. It is also the case for small miners who were effectively pushed out of the BTC mining world.
It is Not a Problem with Crypto
While some think it is an issue with how crypto works, the MD of Autonomous Partners, Arianna Simpson, believes that this is, in fact, part of the design of BTC. Simpson recently twitted that miners shutting down and dropping difficulty is part of the design.
The Bitcoin hash rate has continued to grow throughout 2018. However, the latest drop in prices saw the BTC go to as low as $3,600. This forced a large number of miners to close shop. This led to the hash rate dropping to 33.4 million TH/S from a high of 60 million TH/S representing a drop of almost half.
Because of this trend, it will lead to a balance between revenue from mining and the cost of mining BTC. This will depend on various factors such as the price of BTC and if the hash rate will fall to a new low. Miners will immediately jump back into the mining world, which will then drive the hash rate up with time.
BTC is at around $4,100. This represents a drop of about 3%. It has a market cap of about $72.3 billion and is still the largest crypto by market cap. Thus far, it represents about 53% of the crypto market.
The BTC Hash Rate
The BTC price has been on a steady slide for the past 11 months. This makes it one of the longest bear markets that the BTC has ever experienced. Despite the falling prices, the BTC hash rate has continued to grow. From May to September, the hash rate doubled despite a price drop of about 30% in the same period.
Things have been so bad that even large miners have been forced to shut down their operations. It peaked in October and then suddenly began to slide, reaching about 50% of its original high by the start of December.
An analysis of the market shows that about 600,000 to 800,000 miners had been edged out by mid-November. This is according to data from mining pools. The issue is mainly affecting miners who are using old hardware. However, those with modern miners are still in the industry.
A major concern from this is that it will lead to only a few major miners in the industry. It will mean that mining power will become centralized. It could make it easier to conduct a 51% attack on the BTC. If this happens, it could destroy the whole BTC world. Besides that, it would end any confidence major investors have in crypto.