Bitcoin [BTC] took new lower positions this weekend, going below $ 4,000 for the first time since September 2017. This means that the most dominant cryptocurrency lost about 40% of its price in about two weeks.
This sudden downtrend has taken its toll on bitcoin miners, who make most of their income. Mao Shixing, founder of the third-largest mining pool F2pool has estimated that 600 to 800 thousand miners have now suspended bitcoin mining operations in the midst of this latest crises.
Coindesk, Shixing noted that the hashrate has dropped drastically since mid-November when bitcoin price took a major downturn.
Bitcoin miners, those who confirm transactions on the bitcoin blockchain, earn revenue by mining blocks on the blockchain. To stay profitable, the miners must balance the price of the energy, mining gears and facility maintenance with the amount of BTC earned. At a much lower price, the miners have seen their profits slashed drastically.
Application-Specific Integrated Circuit (ASIC) Mining chips. As Shixing noted, the older mining machines are having a hard time generating profits. He further explained that these older mining gears like Bitmain's Antminer T9 + and AvalonMiner 741 built by Canaan Creative typically manage an average hashing power of about 10 Tera hashes per second (TH / s).
He said he did not change his account. The index shows the bitcoin hashred on F2pool equally dropped from 11.4 percent to 10 percent of the entire bitcoin network.
Hash rate has dropped about 13 percent-from 47 TH / s on Nov. 10 to 41 million TH / s on Nov. 24 The assertions were corroborated by data from blockchain.
"It's hard to calculate a precise number of miners connected to us that had unplugged. But we saw over tens of thousands of them [shut down] in the past few days based on conversations we have with larger farms that we are in regular contact with. "
Reasons for Reducing Hash Rate
Besides the well-documented slump in bitcoin price, Mao Shixing identified a number of recent incidents that may have discouraged bitcoin miners. He said that these factors "overlapping" right now led to the drop in mining revenue and ultimately bitcoin hash rate.
Firstly, an increased electricity cost in China – the hub of bitcoin mining – played a key role in the present situation. Winter season (or dry season) in China, usually with a hike in electricity tariffs, two to the reduced output from hydropower sources during this period. The electricity cost in China has doubled as fossil fuels become the most reliable energy source in the region. Also, older mining machines are quickly being phased out as churn out manufacturers newer gears makes them uncompetitive.
In conclusion, Shixing expressed some hope for the miners based on bitcoin's hashing principle. "Bitcoin mining is always a dynamically adjusted process," he noted.
"The change of bitcoin's mining difficulty normally has a lag of about 14 days. After this wave of shutdowns, those who have opted to stay in better life, he explained.