By Amid declines in price and hashrate across the network, between 600,00 & 900,000 bitcoin miners have been shut down since mid-November according to the world’s third-largest mining pool.
Mao Shixing, founder of F2Pool claims his firm’s estimate took into account the total network hashrate drop and the average hash power of older mining rigs which are currently experiencing difficulties in generating revenue.
According to data courtesy of blockchain.info, the entire hashrate of the bitcoin network, which makes up the aggregated computing power on the world’s very first blockchain, has seen a drop from around 47 million tera hashes per second (TH/s) as of the 10th November to 41 million as of two days ago on the 24th November which is almost a 13% decline.
Shixing went on to explain that many miners which may have ceased mining operations are more than likely making use of older rigs such as the Antminer T9+ which was created by Bitmain & AvalonMiner 741 by Canaan Creative. These miners currently have an average hash power of 10 TH/s and are suspected to be losing money currently, according to the F2Pool miner revenue index.
Furthermore, the current bitcoin hashrate on F2Pool which currently accounts for 11.4% of the total network has also seen the drastic decline of over 10% in the last few weeks according to Shixing who stated:
“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 several days based on conversations we had with larger farms that we are in regular contact with,” adding:
“This is what’s happening among miners in China.”
Back on November 20th, Shixing shared a photo on his Weibo social media account which depicted a man packing away computer equipment into boxes with the caption:
“shutting down is not an option, now have to sell by the kilos.”
The post was widely regarded to mean that even mining gear of a recent vintage was being sold off by the kilo in China, but Shixing later explained that it was but tongue-in-cheek:
“Those miners being sold by the kilos are even older and obsolete models that aren’t usable anymore. So people are selling to recycle [them] like copper instead of for further mining purposes.”
Chinese Winter Approaches:
Let’s take a step back. Shixing also claims that there are a variety of factors which have contributed to the current shakeout in the mining community including the recent market decline which followed after the bitcoin cash hard fork as reprorted by CoinBeat earlier this month. Another factor is the notable increase in electricity costs in China as well as the fact that many manufacturers in the country are falling over each other in order to upgrade their current product offerings which of course makes older rigs increasingly uncompetitive
Shixing stated:
“All these factors are overlapping right now which led to this recent phenomenon,”
As winter approaches the largest Asian nation. Hydropower plants are experiencing a dry season all the while electricity costs have double from what they would have been if the water was abundant in the summer.
Shixing claims that during the summer, electricity costs in the mountain region of the southwest of China, where many mining farms are based could possibly go below 0.2 yuan or $0.029 per 1KW/h but during this time of year its more than likely to going to go up above 03. Yuan or $0.043.
Even if we take into account the other fossil fuel power stations, for example in the Xinjiang province, where electricity is generated at a more steady rate, overall costs still sit at 0.28 yuan ($0.04) per 1 KW/h claimed Shixing.
Due to the fact that the price of BTC has dropped to the 13-month low below the $4000 mark, many mining farms which make use of machines from 2016 and 2017 with lower productivity have been unable to break even added Shixing.
Notably, the fact that many mining farms have switched off power does not necessarily mean they finished with mining.
“Bitcoin mining is always a dynamically adjusted process”,
added Shixing, which basically means, that when the hashrate drops as does mining difficulty with the latest data showing that BTC mining difficulty has already dropped by about 5% within the last few days alone.
This means of course, that this dynamically adjusted process could very well give those who haven’t thrown in the towel an advantage & incentive to continue mining claimed Shixing adding:
“The change of bitcoin’s mining difficulty normally has a lag of about 14 days [following hashrate change]. After this wave of shutdowns, those players who opted to stay in may have a better life.”
Do you agree with Mao Shixing’s insights? Are you a miner who hasn’t given up? Let us know how your mining efforts have been in the last few days by leaving a comment below.
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