Due to the continuous bear trend, the bitcoin mining industry has been suffering the most as the bitcoin mining operations have started to become unprofitable or rather companies are facing losses due to the decreasing price of bitcoin. Let us see the current scenario of two giants of the bitcoin mining industry:
GMO internet is a giant Japenese company that decided to come into the bitcoin mining game last year when bitcoin price was touching $20K. They were not only mining bitcoin themselves but they were also offering cloud mining contracts and selling hardware. When they first announced their launch, everyone was excited as they were being called the ‘Bitmain Killer’, as finally a giant corporation which has enough money to be able to make on Bitmain head on. Unfortunately, soon the bear market started and a massive amount of people had already joined the bitcoin mining industry until then, so bitcoin mining started to become unprofitable very quickly especially for smaller mining companies and anyone who couldn’t remain incredibly competitive in terms of getting super cheap energy or actually owning the means of production of that energy.
GMO started to suffer from extraordinary losses of over $300 million particularly due to their bitcoin mining operations in quarter four of this year. In quarter three they had made about $23 million on their bitcoin mining operations but they GMO has officially announced that they’ll not be selling any bitcoin mining hardware. Even though they have stopped their bitcoin mining hardware sales, they’re still mining bitcoin with the machines that they have but they are still looking for a region where they can get cheaper power or cleaner energy.
Bitmain has been having a very hard time this year as well. When it comes to the recent announcements that they might be cutting 50% to 80% of their staff, that is devastating. They had recently launched a new generation of miners and it obviously takes a lot of time and energy to research into developing these new products and to make these new chips but not a lot of people are buying these new products as due to the bear market and bitcoin price crashing down, it is being very hard to make profit out of bitcoin mining business. Bitmain runs a giant amount of the actual bitcoin mining and they have maintained that in terms of being able to keep the miners running and keep some kind of profitability running and they have been expanding their operations around the world like opening up some big new facilities in Washington State and Texas. But they are definitely struggling hard in the current market situation.
The Bitcoin Cash War is the part that has hurt Bitmain the most because they not only had to spend a lot of money to fight that war, but Bitmain has around 1 million Bitcoin Cash and the price of Bitcoin Cash since the start of the year has crashed monumentally. They also control a huge amount of Litecoin too and again they have been holding on to these assets as the price has gone down and now they cannot fund their staff, their development and their investment arm anymore which is very troubling news for Bitmain.
Although bitcoin mining has become unprofitable for some miners, there is still a lot of hash power on the bitcoin network and even though we have had some pretty substantial decreases in the network hash rate and in the difficulty, this is a pretty normal market reaction. People who cannot compete will turn off their machines and people who can still mine bitcoin profitably will continue their bitcoin mining operations. If we compare the current hash rate and network difficulty with the hash rate a year ago, we are way higher right now so bitcoin continues to be a very secure network and even though companies like GMO went down, we will see new competitors come in. Samsung, the multinational conglomerate is also working on bitcoin mining hardware. So definitely the game is still too far from being over yet.
What are your thoughts on the future of bitcoin mining? Tell us in the comments section below.
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