Bitcoin Mining Joins the Decline of Cryptocurrency after Crash
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The Bitcoin mining community struggles to regain composure following the recent crash. Since May, 2022, Bitcoin has fallen to more than 40% its former glory and is now dwindling slowly from $19,000.
The crash brought Ethereum and a host of other cryptocurrencies down with it. A swirl of panic violently emerged as sell-offs flooded the market. As expected, the crisis has now spilled over into mining since it’s one of the primary methods of obtaining Bitcoin. It may not be the most preferable method, but is certainly the most risk-averse route in terms of financial investment.
Since the beginning of Bitcoin’s plummet, miners have reportedly sold more Bitcoin than their actual output. The typical strategy for mining is to sell a small portion of what you make and hold (HODL) the rest, counting on the price going up for even more profit.
When Bitcoin’s price fell, miners saw no reason for holding on to their stash, at least for the short term. Bitcoin mining is generally frowned upon due to massive energy consumption and high usage of graphics cards. The only thing that used to weather against that was the steady payoff from bullish market movements.
With the only incentive out of the equation, perhaps temporarily, miners could no longer justify continuation of such taxing operations.
Bitcoin Miners Auction Off Their Equipment
One of the main components of a Bitcoin mining rig is graphic cards. Some of the preferred brands include AMD and NVIDIA as they make the leading hardware for gaming.
Back when the market was smooth sailing, gamers had reported a shortage of gaming GPUs and high-end graphic cards. A majority of these products were consumed by pool mining organizations that had a constant demand for processing power.
Following the Bitcoin crash, miners are salvaging whatever they can to escape a net loss, and that includes mining rigs.
Many online auctions are popping up on Chinese livestreams, offering high-end graphic cards and crypto GPUs at a much lower price. You can find some of the most powerful gaming cards, like the (GeForce) RTX 3060 Ti at a more than affordable range of $300 - $350.
Some of these equipment look fairly new while others appear pretty worn out, but the best part is they’ll be able to run most of the latest games. Any aspiring crypto miners could also see this as an opportunity to start off cheap.
Bitcoin Mining - Where Does it Go From Here?
Things may look gloomy for Bitcoin mining as an industry, but it certainly isn’t dead. In fact, it is far from dying. As former miners make their exit to wait out the chaos, new operators will take their place and invest in the dip.
Mining Bitcoin may be less profitable at the moment, but it’s also become easier. On average, it takes about 10 minutes to mine a block of transactions. To maintain this rate, the difficulty of solving the encrypted code adjusts every couple of weeks.
It used to be much more difficult to mine due to an overload of competition in the network. While it doesn’t take long to solve a transaction, if there are too many miners competing for it, the chances of getting to work on it is low for any individual.
That’s one of the reasons pool mining exists. They are large organizations with thousands of rigs running day and night. Hence, they always have more chances of getting transactions than a single entity.
Now that miners are dropping out of the race, the chance of competing for smaller mining groups has increased. It might not be much, and will eventually plateau, but this could be a great opportunity for those who have wanted to try their hands at Bitcoin mining.
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