How the Biggest Bitcoin Mining Operations Are Fairing Amid Current Bear Market Conditions
Cryptocurrency space has just seen the longest crypto winter in recent times which led to the slide in prices of the majority of the altcoins. The bear market was so strong that most of the altcoin saw its market capitalization get reduced by a massive 80% and in certain cases, a few altcoins also got bust and had to end up in the crypto graveyard.
The investors who jumped on the crypto bandwagon after 2017 price peak suffered dearly, but the biggest impact of the crypto winter was seen on the mining community. The bearish markets have impacted the crypto community across all shapes and sizes and especially the individual miners.
The severe fall of prices made it impossible for the individual miners to make any profit out of the mining process given the initial cost of setup quit high. The mining rigs itself can cost anywhere from a few hundred dollars to even thousand for high-end ones. The decline in prices made many individual miners in China to even sell their rigs in weight at dirt cheap prices.
When Satoshi Nakamoto introduced the Bitcoin White Paper back in 2009, he intended the mining process to provide equal opportunity to everyone to earn crypto riches. But, as the prices rose, people realized that mining is the best way to make money, and the mining became a legitimate business. Later the whole mining scene was hijacked by the big mining farms with tons of resources, cutting the share of individual miners. Thus, the bearish market made mining almost im-profitable for individual miners.
However, despite the falling prices, a few mining farms have found a way to make progress even when most of their competitors are struggling. One such mining company is Bitfarm.
BitFarm Secures $20 Million In Loan Financing For Expanding Their Crypto operation
Bitfarms Ltd had earlier informed its investors that it has secured a $20 million strategic debt financing, which the firm is going to use for expanding their ongoing operations. The financing for the firm is being done by a New-York based Dominion Capital, who would release the fund in four installments of $5 million each.
The release of funds would be based on milestones achieved by the Bitfarm in the form of infrastructure building and hardware purchases. The Dominion Capital would charge a 10% interest rate over the financing and expected to receive 6.7 million equity purchase warrants that can be exercised to acquire Bitfarms’ common shares.
Bitfarm operates a total of four mining farms in Québec, Canada and has a hash input of 220 Ph/s all generated through clean and green renewable hydroelectricity. The CEO of BitFarm has assured that they are already on the move and have started to use the financed funds towards its operational expansion.
The company is planning to establish a new center in the municipality of Sherbrooke, Québec and equip the new center with highly efficient ASIC chip based mining rigs. Due to the decline in prices of cryptocurrencies the mining equipment makers have also suffered dearly and these rigs have become much cheaper, providing a perfect opportunity to the firms like BitFarm.
Crypto Winter Has Proven To Provide Opportunity to Those Who Go Looking For it
It's an established fact that the crypto winter has brought doom to most of the people associated with the crypto space, be it miners or the investors. But, the longest crypto winter has also opened the gates for big mining farms like BitFarm to utilize the situation to their benefits.
Firms like BitFarm have turned the crypto winter to their benefits as the bearish trend has not only impacted on the prices of the crypto token but brought down the prices of mining hardware as well. Add the thinning competition from the smaller players and you have a perfect opportunity to grow.
Bitfarm CEO explains,
“It has been a very challenging environment for many cryptocurrency miners to maintain profitability. At current network difficulty and BTC pricing, and assuming the average miner allocates 10% of power to cooling, a 13.5 TH/s S9 Antminer (arguably the most prevalent SHA-256 ASIC miner in use) is currently losing money at power costs above US$0.068 per kWhr. This break-even analysis doesn’t include operational overhead. Despite falling BTC prices, in 2018 we witnessed a period of exponential network hash rate growth as miners purchased earlier in the year were brought online.”
The head of the BitFarm is also optimistic about the recent rally of prices in the crypto trade market. While the markets haven't made in significant strides like 2017, but with the crypto winter almost on the verge of its end, and many crypto analysts have predicted that the next bull run is just around the corner, the recent expansion by BitFarm can actually make the firm one of the most beneficial in near future.
The head of BitFarm also talked about the pricing hardware metrics and how cheap hardware amid depressing market prices serve as a perfect opportunity to outgrow the competition. He elaborated,
“Many miners paid exorbitant pricing for hardware in late 2017 and during the first half of last year. Much of this hardware landed inexpensive hosting facilities under contracts that are no longer economic. With the decrease in BTC pricing and increase in mining difficulty, these participants have failed to recover their original hardware costs which will certainly deter further investment. As in any nascent industry, markets will experience volatility and things will take time to mature. Going forward, external investment capital will be reserved for the best projects led by experienced operators.”
The initiative by the BitFarm could surely prove to be a masterstroke given the competition has thinned out severely amid the declining prices of the crypto token. The timing could make BitFarm another mining company making millions just like Bitmain did during the 2017 crypto hype.
However, the stakeholders would hope not to repeat the mistakes committed by the Bitmain in business execution which brought them from a mining company which made a billion during 2017 and almost came on the verge of going bankrupt towards the end of 2018.