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blakicious

Bear market is noticeable especially for miners

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Few months back, very big crypto mining centers and facilities around Asia and Europe have shut down, due to falling crypto prices as well as a drop in the general market activity.

Financial Times, this week revealed that Bladetech (a startup launched in March to build U.K’s biggest Bitcoin mining facility) has postponed its plans as a result of the 87% correction of the crypto market.

 

Currently there is no gain in the Mining of Crypto

Outlier Ventures CTO and founder, Aron van Ammers, said that bitcoin's present price at around $4000 has squeezed out profits from miners in the global sector.

Research has revealed that since summer 2018, some miners have been mining Bitcoin and other crypto assets at a loss, as crypto values fell below the breakeven cost for miners.

For example, BitMEX Research (a research arm of crypto exchange BitMEX) revealed that crypto mining equipment manufacturer, Bitmain, which is valued at $15B at the start of the year sold almost all of its mining equipments at a loss. The researchers said that:

Quote

This analysis implies Bitmain are currently loss-making, with a negative profit margin of 11.6% for the main S9 product and a margin of over negative 100% on the L3 product. In reality costs are likely to have declined so the situation may not be as bad, however we think it is likely Bitmain are currently making significant losses.

 

The research revealed that, probably as a result of the reduction in the demand for Bitcoin mining, the company struggled to sell a large part of its Antminer S9 miners and its flagship mining equipment. The researchers added that:

Quote

Another reason for these low prices and apparent losses may be that Bitmain has too much inventory on the balance sheet. As at March 2018 Bitmain had $1.2 billion of inventory on the books, equal to 52% of 2017 sales. Bitmain may therefore have had to suffer inventory write downs, which could have generated further losses in addition to the loss making sales.

 

This is a period where individual miners as well as smaller mining centers will most likely experience greater losses, due to the fact that the most dominant crypto mining corporation in the world is finding it very difficult to generate profits. A crypto bank executive revealed that miners are striving hard to the extent that they are starting to hate life and until there is an increase in Bitcoin price or the Bitcoin network’s hash power declines, miners will not make any profit.

 

Miners might continue mining at a loss

The minimal decline in Bitcoin network’s hash power also indicates that miners are not making any gains through mining, and they are hoping to make some profit as soon as the asset’s price rises.

Presently, miners are finding it difficult to shut down their facilities completely and part ways with mining due to the mining equipments which they’ve acquired as well as the long-term agreement they have with electric grid operators.

 

 

 

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