The life of Bitcoin under the surge and plunge: mining machine giants usher in spring while exchanges die in winter

After a year of slump last year, the price of Bitcoin, the world's largest digital cryptocurrency, has begun to show signs of life, rising to $14,000 at one point. Although it has fallen back recently, it still recorded a huge increase compared to the beginning of the year. As of press time, the digital currency is still above $10,000.

The price of Bitcoin fluctuates greatly. In December 2017, the price of Bitcoin once climbed to over $19,000, but then fell all the way to just over $3,000 in December 2018. Since the beginning of this year, the price of Bitcoin has increased by nearly 200%, and most of the increase has been achieved in the past three months, indicating that the price of Bitcoin has fluctuated extremely violently in a short period of time.

As for the reason for the surge in Bitcoin prices, the mainstream market opinion believes that this is mainly related to the launch of Libra, the digital currency of the social giant Facebook. Facebook recently announced its social network cryptocurrency Libra. The launch of this cryptocurrency project ignited the enthusiasm of the market because the market believes that cryptocurrency has the potential to go mainstream.

However, the launch of Libra by Facebook is not enough to drive such a large increase in Bitcoin. Its safe-haven attribute is another major factor. Analysts pointed out that recently, amid the Sino-US trade dispute, the slowdown in global economic growth and the escalation of the US-Iran geopolitical situation, a large number of investors bought Bitcoin as a safe-haven asset to hedge against the turmoil in the global financial market.

The roller coaster ride of Bitcoin is heart-pounding and exciting, and many people are confused by its wild and volatile trend. The sharp fluctuations in the value of Bitcoin, a cryptocurrency, not only concern every investor, but also affect the companies and industries related to it.

Some welcomed the spring, some died in the winter

Mining machine giant Bitmain has recently launched another attempt to go public. Last year, its plan to go public in Hong Kong was shelved due to the low price of Bitcoin. This time, taking advantage of the rise in Bitcoin, it changed the listing location to the United States. It is reported that Bitmain has submitted a prospectus to the US Securities and Exchange Commission (SEC), but it has not yet been announced whether it will be listed on the New York Stock Exchange or Nasdaq.

One company that has felt the sharp fluctuations in Bitcoin prices is Bitmain. As Bitcoin prices continued to fall last year, Bitmain's application for listing in Hong Kong failed. In addition, the mining machines developed by the company were not in demand, and the company's revenue also plummeted.

While people are still worried about when the cold winter of the mining industry will end, the reversal of Bitcoin prices has dispelled the haze that has been hanging over the industry. Since the end of March this year, the price of Bitcoin has been rising from $4,000. After entering June, the upward momentum has further intensified, directly breaking through the $10,000 mark, and rising to $13,000 at most. In the process, Bitmain's mining machines began to become popular, and even became hard to find, which is in sharp contrast to the deserted market last year.

From Bitmain's official website, we know that the mining equipment provided by Bitmain is called Antminer, which can not only mine Bitcoin, but also other cryptocurrencies. Bitmain provides different models of Antminers, with different computing power and prices. Currently, all major models of mining machines have been sold out, and the delivery date of some models of mining machines has been scheduled to August or September. In addition to mining machines, some hardware components are also sold out, which is enough to show the hotness of the current mining machine sales market.

Image source: Bitmain official website

While Bitmain is enjoying good times, some participants in the cryptocurrency circle are not so lucky. Since last year, global Bitcoin trading platforms have experienced large-scale closures. In the Bitcoin bear market, many trading platforms failed to survive the cold winter. It is reported that CATTLEE, a Chinese Bitcoin trading platform that had just been online for less than ten days on June 6, 2018, declared bankruptcy. Not long after, another Chinese trading platform 86bex also announced that the platform could no longer continue to operate and would close the withdrawal channel. Not only in China, but also in foreign Bitcoin trading platforms, it is not easy. In March 2018, Coinbin, a South Korean virtual currency exchange, filed for bankruptcy because it was already in financial difficulties. At the beginning of this year, Liqui, a Ukrainian cryptocurrency exchange, was unable to operate due to the continued bear market of cryptocurrencies and announced its closure.

The bear market of Bitcoin has also affected the enthusiasm for establishing Bitcoin exchanges. According to information released by the CoinMarketCoin website, only one Bitcoin exchange ranked in the top 100 in terms of circulation has been newly established this year, while the number in 2018 and 2017 was more than 20. With the unexpected surge in Bitcoin prices in the middle of this year, it is unknown whether the enthusiasm for establishing exchanges will be rekindled.

Is the bull market starting or taking a sharp turn for the worse?

Where will the price of Bitcoin go in the future? Will it repeat the previous mistake of skyrocketing and then plummeting, or will it usher in a bull market for Bitcoin?

It is reported that by May 2020, the reward for Bitcoin mining is expected to be halved, which will reduce the enthusiasm of miners, thereby reducing the supply of Bitcoin and pushing up the price of Bitcoin.

It is worth noting that if Facebook's launch of Libra ultimately boosts people's enthusiasm and acceptance of Bitcoin as some experts predict, the halving of Bitcoin "mining" rewards will lead to a larger supply gap.

As early as the end of May, the co-founder of blockchain investment company Kenetic believed that Bitcoin would rise to $30,000 by the end of this year. In early June, the founder and CEO of Digital Currency Group pointed out that "it looks like cryptocurrencies will come out of winter and enter spring."

Mark Lam, CEO of CoinFLEX, also expressed his confidence in cryptocurrencies, noting, “In the long run, it is obvious that cryptocurrencies will replace some or most fiat currencies, the question is when that will happen. This is what causes the wild volatility in cryptocurrency, because it is still very early and only tens of millions of people are using it, while traditional currencies have billions. This was my view in 2012 when I went all in on Bitcoin and even borrowed money to buy it, and I still hold the same view now.” CoinFLEX is the world’s first futures exchange for physically delivered cryptocurrencies.

However, there are also cautious voices in the market. Tone Vays, a former Wall Street executive and now a veteran blockchain expert, expressed doubts about the view that the cryptocurrency winter is over.

Fang Gang, founder and managing partner of Sora Ventures-Majority, pointed out that "most of the transactions are done over the counter. We say that more than 70% of the transactions are completed through over-the-counter transactions. Based on this, you can assume that anything is possible, it can go back to $5,000 or reach $20,000." He also gave specific investment advice: "If you are an individual investor, don't think about taking advantage of the trend to invest in Bitcoin and then exit quickly. It is better to regard the currency as a long-term investment and a high-risk product."

Source: Forbes China