Rapidly Falling Crypto Prices Force Chinese Crypto Mining Firms to Dump Hardware Equipment
The ongoing decline in cryptocurrency prices has continued to cause widespread fear among miners, as well as forcing them reevaluate the cost of mining operations. This has become even more prevalent in China where these plummeting prices have made crypto mining activities less attractive.
Also, there are more miners dumping and selling off their mining equipments. According to recently released reports from Chinese crypto outlet 8BTC, there are suggestions that crypto mining operations are trading off mining equipment.
Instead of selling their equipments by units, the price decline has forced crypto operators to sell in bulk. The report is coming on the heels of crypto market loosing so much billions of dollars in the last couple of weeks.
In fact, Bitcoin recently crashed to a terrible low of $4300, an 80 percent decline from its record high of $20,000 in the first month of this year. Apart from decreased mining profitability, there is also a wide decrease in market capitalization.
One of the reported losers is F2Pool which was forced to sell off its equipments, no thanks to the high cost of maintaining and operating them. In fact, cost of equipment maintenance is reportedly higher that income generated from their mining activities. As a result, this has made crypto mining largely unprofitable.
Recently, efforts have been made by these miners to reduce the cost of older mining equipment, but all to no avail. Some of the expensive equipments which continue to spin money for miners include the Antminer S7, the Avalon A741, and the Antminer T9.
To avoid the continual loss of profits, mining operators are often willing to sell off their equipments for a steep fraction of their cost price –some as low as 5 percent of their original value. One of the machines with a retail price of $2,885 last year, was has been traded off for a paltry $144.
For those in the know, it’s not surprising that the “terrible” situation is coinciding with the ‘hash war’ pitting pro-Bitcoin cash network proponents against the other side who insists that there is no bullish future for the network.
It should be recalled that the code for Bitcoin cash’s hard fork was activated earlier in the week leading to the formation of two opposing chains.
The software upgrade of Bitcoin Cash blockchain caused the chain to split into two chains, namely, Bitcoin Satoshi’s Vision chain (Bitcoin SV) and Bitcoin ABC chain, both of which are respectively owned by Craig Wright and Jihan Wu.
The bi-chain outcome came following the software upgrade known as a “hard fork.” The consequence of that is that users and proponents of each chain are making frantic effort to sell their own chain to miners.
As at press time, there’s been no clear winner in the battle for dominance between both chains. The one thing that’s increasingly clear is that these two chains are fiercely pitted against each other, with one hoping to establish clear dominance in the near future.
Currently, each group is deploying and renting huge amounts of mining power (hash power) to ensure that their respective chain takes the center stage.
An example of this occurred early in November, when Chinese mining giant Bitmain proposed to attract a lot of crypto miners from Xinjiang to help lend support for the Bitcoin ABC chain.
Of course, the hash war has received a lot of backlash and blame from analysts who insist that the splitting of the Bitcoin cash network triggered the current state of the market.
According to these analysts and industry experts, the “battle” between the two opposing sides has wrecked great damage on the Bitcoin network by removing so much hash power from it, thus causing the radical price fall of Bitcoin.
These large amounts of hash power being deducted from the Bitcoin network which the opposing sides deployed to pay for rented hash power, analysts claim, may have heighten the loss of value of the Bitcoin token.