Bitcoin is falling, how are miners doing?
Last week we discussed why Bitcoin is falling, despite purchases from crypto enthusiasts and active accumulation of coins. Not only investors, but also miners suffer from falling prices. How bad are they doing?
The Bitcoin network is “programmed” to create a block every 10 minutes.
To maintain the speed at the same level, a change in the complexity of the calculation is used. So, with an increase in the number of miners, the complexity increases, and with a reduction in the total computing power, it decreases.
From the November highs, Bitcoin has already collapsed by 44%, but the complexity of the network and the total computing power continue to set records. Simply put, miners connect new installations, despite a significant drop in price. Is mining really so profitable?
The top asic from Antminer S19 Pro still generates income, now it is about $ 14. The queue for them in Bitmain exceeds six months, and the current retail value on Amazon is $8,999. It is easy to calculate that with such introductory installation will pay for itself in two years at best.
With such deadlines, Bitcoin mining is no longer interesting to individuals, and the ever-increasing complexity, in principle, threatens to reach self-sufficiency. Also, a lot depends on the country of origin and the cost of electricity. Large companies can afford to place equipment in optimal regions, therefore, they will retain income on the same devices, while the private owner will be forced to abandon mining.
The second aspect is the ability of public companies to attract investment capital and constantly update equipment at the expense of investors. A good example is Riot Blockchain. The company competes for world leadership among public mining companies and is constantly updating its ASIC fleet. Riot now has a computing capacity of 3 EH/s, and by the fourth quarter intends to increase the figure to 12.8 EH/s. As a result, every year the company ends up with a loss, but continues to increase activity in attracting investments and buying equipment.
Mining is alive, but increasingly takes on a form different from the principles of Satoshi Nakamoto. Instead of maximum decentralization, computing power is accumulated in the hands of large capital. With the further natural merger of mining companies, the situation will only worsen.
However, the situation that has arisen has a positive side: due to the lack of profit, miners are holding Bitcoin in the hope of future growth. The overall reduction in supply supports its value.