Is It Wise for New Bitcoin (BTC) Mining Players Make a Move in a Sluggish Bear Market?
Despite the start of 2019 is being quite good for Bitcoin, the premier crypto asset has once started to experience a high degree of volatility over the past few days. To be more specific, we can see that at the start of the year, the currency was valued at around $3700, however, since then the asset has risen to over the $4K mark and subsequently fallen below its former price point. And while bearish indicators continue to persist (at least for the foreseeable future), we should ask ourselves the question
“What do all these fluctuations mean for the crypto mining industry?”.
So without any further ado, let's dive straight into this question.
As many of our readers already know, Bitcoin was the first cryptocurrency to make use of a blockchain framework. For those not aware of what blockchain is, it is a technology that makes use of novel consensus mechanisms to facilitate internal transactions and processes associated with a variety of different altcoins. Additionally, it is also worth remembering that there are only 21 million BTC tokens available in total (of this figure, 17 million coins have already been mined, which leaves only 4 million tokens left in reserve).
As per the calculations of many experts in this field, the aforementioned Bitcoin reserve is all set to deplete by the year 2140. The reason why about ¾ the of Bitcoin’s total number has already been procured while the remaining tokens will take more than a century to be mined is that as time passes by, the complexity of calculations involved with mining BTC blocks becomes tougher. Not only that, even mining rewards associated with the currency gradually decreases as time passes by— so for example, when the mining industry took off, miners received a total of 50 bitcoins BTC per block, however, this amount has now been reduced to around 12.5 Bitcoin.
More On The Matter
It is also worth mentioning that the reason why Bitcoin is so free of any corruption and under-handedness is that of its use of a PoW (Proof of Work) consensus algorithm. It provides the currency’s ecosystem with a high level of security but at the same time brings with it huge external costs associated with power and energy consumption.
On top of this, mining rigs are extremely costly and difficult to house. For example, large scale rigs generate a lot of heat and thus require air conditioned facilities to keep them working at an optimal level.
So Should I Mine Bitcoin In Such Market Conditions?
Since the start of 2018, many tech manufacturers such as NVidia and AMD have discontinued the production of their GPU miners— primarily due to a lack of interest in the technology as well as dropping customer demand. Not only that, late last month, it was also being reported that Chinese giant ‘Bitmain’ was getting rid of its mining equipment so as to minimize its overall losses.
With this information in mind, it should be clearly understood that the prices associated with mining Bitcoin today have become extremely high. This has a lot to do with the fact that the machinery involved is too expensive and the returns are not enough for most firms to break even (at this point).
Even though Bitcoin mining is not as popular as it once was, it is expected that once the market turns bullish once again, this industry will start to pick up in a big way. However, when that day will arrive is anybody’s best guess.