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Miners Having Trouble Staying Profitable as Bitcoin Prices Fall

Miners Having Trouble Staying Profitable as Bitcoin Prices Fall

Reading Time: 2 minutes by on November 23, 2018 Bitcoin, News
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Bitcoin prices have fallen nearly 30 percent during the second half of November, hitting a 13-month low of $4,400, leaving many miners struggling to stay profitable, the South China Morning Post reported on November 21, 2018.

As Bitcoin Prices Fall, Mining Cryptocurrencies Is No Longer Profitable for Many

Prices of bitcoin, the world’s leading digital currency, have tumbled nearly 30 percent in the past week and hit a 13-month low of about US$4,400, data from CoinMarketCap showed.

According to the South China Morning Post, the total market value all cryptocurrencies held slumped to just over $148 billion, which is less than one-fifth of its worth during the market’s peak in January 2018.

And while the sudden drop in value has impacted both small traders and big investors, they aren’t the ones that are hit the hardest by the market slump.

The price drop has left a large percentage of miners in a vulnerable position, as they’re struggling to stay profitable in a cutthroat industry.  At least four different models of bitcoin miners have become unprofitable, as they consume more power than they’re able to pay off by mining.

According to the latest estimates of Beijing-based F2Pool, one of the world’s biggest bitcoin mining pools, miners that consume power at a rate of $0.06 per kilowatt-hour or more,  are currently operating at a loss.

Beijing-based Companies Hit Hard by Mass Sell-Off of Bitcoin Miners

F2Pool estimates have shown that the miners that were deemed the least profitable were also the most popular miners. Current market conditions have made the Antminer S7 and Antminer S9 from Bitmain Technologies as well as Canaan Creative’s AvalonMiner 741 too expensive to operate, the South China Morning Post reported.

Beijing-based Bitmain and Canaan, headquartered in the eastern coastal city of Hangzhou, are the world’s two biggest suppliers of cryptocurrency mining rigs. These two companies, along with Ebang International, another rival, have announced plans to launch an IPO in Hong Kong. However, the current bear market might make the idea unattainable.

Suanlitou, a Hong Kong-based mining platform that allows users to mine bitcoin on a contract basis, has announced that it has suspended all contracts involving Bitmain’s Antminer T9, the most in-demand rig in the market, as it was unable to cover electricity fees incurred by the machines.

A group of unnamed Chinese cryptocurrency miners has told the South China Morning Post that they have already shut down 20,000 rigs, or about 10 percent of the total number of machines they operate.

However, the bearish market seems to have had little to no effect on Jack Liao, who runs Shenzhen-based bitcoin mining firm, Lightning Asia.  Liao told the publication that he bought about 50,000 pre-owned bitcoin mining rigs that were put up for sale in the market over the past few days, most of them the Antminer S9.

Liao said he plans to ship these used rigs to countries with cheaper electricity, such as Russia and Venezuela so that he can turn a profit selling them there.

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