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Although it has been more than two months since the Bitcoin halving event, the crypto mining industry is still reeling from the frenetic pace of the ensuing event. The roller-coaster hash rate has sent Bitcoin (BTC) and Ether (ETH) prices soaring, bringing mixed feelings to crypto miners. The coronavirus pandemic has also left its mark on the industry, forcing dozens of mining pools to either shut down or shift their focus from mining the increasingly difficult Bitcoin to less complex altcoins.
Given the challenges facing the mining hardware market, the upcoming launch of Ethereum 2.0 has given all miners trying to maintain profitability something to think about. Private miners have taken a hit in the wake of the Bitcoin halving and the coronavirus pandemic, but large manufacturers have also been affected. Will the upcoming Ethereum upgrade exacerbate the situation for mining equipment producers, or is it just another milestone that is easy to adapt to?
Fewer, but still in operation <br />The Bitcoin halving has led to a serious purge in the mining market, and small miners have lost the meaning of continuing to survive, but after private mines have almost disappeared, the number of major mining pools has not decreased significantly.
Alejandro De La Torre, vice president of Poolin, said that 15% to 30% of the miners in private mines that produce Bitcoin computing power are facing tremendous pressure and cannot survive, and are gradually closing down. It is expected that the computing power will drop by up to 20% in the short term, an average of 6.5% per day. In general, the hash rate seesawed from a high of 135 exahash/s to 98 EH/s after the halving, a drop of 27%. But this did not affect people's interest in cryptocurrencies. Institutions have flocked to the derivatives market, and Bitcoin options open interest has increased by 1,200% in two weeks.
In May, as the price of Bitcoin fell from $10,500 to $8,100, nearly 2.3 million S9 Antminers were shut down, which was clearly reflected in the decline in hash rate from China, with most of the old mining equipment becoming unprofitable and being sold for scrap.
Not Everything Is So Bad <br />While the rapid spread of the coronavirus pandemic in early 2020 affected supply chains and halted operations at major mining machine manufacturers, the disruption did not last long as companies in China and South Korea — home to the largest manufacturers — quickly resumed deliveries.
After resuming operations in February, Hangzhou-based Canaan also announced the launch of the AvalonMiner 1066 Pro, its latest chip model with a computing power of 55 terahash per second.
Powerry, a 100 MW cryptocurrency mining operator, has announced that it is expanding its capabilities by placing a $20 million order for new mining hardware. The equipment will be provided by Bitmain and MicroBt, while the farm power will be handed over to Genesis Mining’s enterprise crypto mining farm software HEXA.
Therefore, it can be concluded that even if the impact of the pandemic on the world expands, it will not have a significant impact on mining machine manufacturers, because manufacturers will be under pressure to provide more new mining machines to miners to keep up with industry requirements. If a second wave of the epidemic occurs, at most delivery delays and equipment price increases can be expected, and manufacturers will only benefit from it.
The pandemic has not affected the operations of the largest mining farms in China, as any disruption would have disrupted the Bitcoin network’s hash rate. But even the worst-case scenario, a China-wide shutdown, is unlikely to cause serious losses, as other mining farms will seize the opportunity and keep the hash rate stable. The hash rates of major currencies are likely to fall due to the closure of Chinese mining farms, which would cause the mining difficulty of digital currencies to increase by about one-fold, doubling the profit margins of mining.
ETH and other altcoins <br />On the one hand, the volatility of altcoins will have an impact on miners. As the price of Bitcoin rises, other digital assets follow Bitcoin faster, greatly improving the economics of their production.
Experts believe that despite the halving, Bitcoin will remain the most suitable currency for mining in the long run, as its price is more stable than that of altcoins, which can depreciate significantly. Those who are still willing to stay in the mining game can choose safe assets with higher liquidity and capitalization, such as Litecoin (LTC) and Dash.
Rashit Makhat, co-founder of Powerry, said:
“Due to the Bitcoin block halving that occurred on May 11, 2020, the block reward … was halved. To stay ahead of the market, miners must update their fleet of equipment in a timely manner. Before 2020, the most popular machine, the S9, was no longer profitable for miners in almost all regions, including regions with low energy costs such as China.”
Miners and manufacturers still sink and swim <br /> Despite the technical setbacks spawned by the halving, Bitcoin is likely to remain the currency of choice for mining for years to come. The main reason is that its price is relatively stable compared to altcoins, which are too volatile to be reliable as a profit-fixing asset.
In the long run, miners will become less and less dependent on events such as halvings. As the coin's infrastructure develops, the reward for processing transactions on the network will increase and, over time, may exceed the reward for finding blocks.
As for manufacturers, they will continue to churn out equipment and offer attractive prices and upgrades to stay dynamic and adapt to the rapidly changing requirements of various networks.
Source: Cointelegraph |
