Bitcoin hash rate fell 50% + due to the relocation of mining companies from China. How is the mining market feeling right now and is there room for new players?
There were some important events at the crypto market for the past two months. Bitcoin network hash rate has dropped by more than 50% by the end of June from May results because of 70% of Chinese miners who’d stopped working.
The PRC authorities are making the regulation of cryptocurrencies in their country stricter. In June, four Chinese provinces completely banned cryptocurrency mining. Banks and other financial institutions in China are not allowed cryptocurrency transactions and any connections with companies whose activities are related to digital assets in any way.
Chinese bans have led to the transfer of equipment to other jurisdictions. The first to do this was BTC.TOP and HashCow, and on June 6, IBC Group announced similar intentions. From China, their mining equipment will travel to North and South America, the United Arab Emirates, Kazakhstan, and Iceland.
As a result, now the difficulty of mining has decreased to 14.36 terrahash by 27.94%. The next recalculation of difficulty will reduce the indicator by another 28%, according to experts.
Mining difficulty is a composite parameter of the blockchain. It determines the required amount of power to identify 1 block. The complexity of the network correlates with the hash rate. The higher the hash rate, the greater the difficulty of mining and vice versa.
The best moment to come in
This is a unique situation for the mining market today. Equipment prices have dropped and mining benefits have nearly doubled. Experts as one declares the best moment to enter mining for beginners. The main issue remains the problem of placing mining equipment. Due to the current situation, the demand for farm space is 10 times or more ahead of supply.
After recalculating the complexity of the Bitcoin network, miners began to receive more profit than before the massive outage of equipment in China. That is, all this benefit is leveled out due to the depreciation of bitcoin in the last 2 months.
Internal calibration of the bitcoin network is performed as follows. The network encourages miners to be profitable in situations where mining stops. The hash rate drops, the remaining miners receive more coins, and this attracts new miners to the network.
It is worth remembering that mining is one of the most expensive ways to mine cryptocurrency. The costs include the purchase of specialized, expensive equipment, the search and rental of a suitable site connected to the power grids, and maintenance.
Time to recover
The migration of miners from China will take about two years. Today we need huge data centers that are inaccessible to everyone. The process is rather slow and expensive.
It is known that some data centers in North America are signing contacts for hosting as early as 2023.
How to enter the market
A rough recommendation for miners looks like this. Efficient bitcoin mining with a minimum of the risks of hard drive breakdown should start with the purchase of about 500 modern miners such as Antminer S19. Production will be significant and the risk of loss due to breakdowns will be minimal.
All Antminer S19s from the manufacturer (Bitmain) are sold out by the end of 2021 on pre-order. The only way to buy is through the secondary market. Today, the cost of one used Antminer S19 ranges from $ 6.5 thousand to $ 7.9 thousand. The average purchase price of 500 miners will be $ 360 thousand. To this amount, you must add the cost of renting a data center, paying for electricity and equipment maintenance. These costs can vary greatly and depend on various factors.
At the end of June, it became known that Bitmain had suspended the sale of mining equipment to move production and employees from China to other countries.
Remember that there are many other coins to mine with lower thresholds for entry. The threshold for entering mining on video cards is much lower. The minimum purchase should be considered 3-5 video cards for a total of 4-7 thousand dollars.
