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blakicious

Over 100 thousand Bitcoin miners have been shut down

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According to Autonomous Research LLP, over 100 thousand Bitcoin miners have shut down. Fundstrat Global Advisors LLC has estimated that, since the beginning of September, around 1.4 million servers have been disconnected.

Head of Wenatchee (Washington-based Salcido Enterprises), Malachi Salcido said:

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We are entering in the phase when there’s a flushing out of the market. There will be relatively few operations that come out the other side.

 

Majority of miners only make profits when Bitcoin trades at levels higher than $4,500. Since 19th November, it has not closed above that level.

Basically, miners compete to find solutions to complex mathematical problems in order to produce Bitcoin blocks. When there is an increase in hash rate, blocks will be found easily, and when it declines, the reverse will be the case.

 

In order to maintain a blocktime of approximately 10 minutes, Bitcoin automatically adjusts the difficulty of these issues at about two-week interval so as to account for new machines coming into or leaving the network. Just a few will have what it takes to continue. Miners with business models that are very specific and have very low electricity costs. Like in Douglas country, Washington where majority of Salicido's operations are carried out. Reflected in the network difficulty of Bitcoin is the miner exodus, which dropped by over 15% following the regular difficulty adjustment that  occurred earlier on Tuesday. According to data compiled by  Fernando Ulrich (Chief Analyst of XDEX), this institutes the 2nd largest difficulty drop in Bitcoin's ten years of existence and the largest since 1st November, 2011, when  there was a 18% drop in difficulty.

 

F2Pool's Mao Shixing, in an interview, claimed that over 800 thousand miners have stopped operations since the onset of the price decline in November. According to a post by F2Pool, miners wish to sell the older models like Antminer S7, Antminer T9, and Avalon A741.

Alistair Milne, (a Bitcoin entrepreneur), talking about the current trend added that based on harsh rate, this has been the most ‘insecure’ for the Bitcoin network in 5 months. He added that, Bitmain, due to their hoarding of Bitcoin Cash, would make them the most vulnerable miners at low price levels.

Atulya Sarin (Professor of Finance at Leavy School of Business) told MarketWatch that the drop in mining profits marks the fall in the value of Bitcoin. He added that most miners are less concerned about the ledger's security, rather are:

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fair-weather miners looking for a quick buck who could quickly disappear once the opportunity dissolves. Mining at a cost higher than the cost at which you can sell in the futures market destroys value. So, any rational investor has no incentive to mine if the cost of mining is higher than the future price and is better off buying in the futures market. Absent the mining activity, Bitcoin is just a set of encrypted numbers with no value.

 

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