The bitcoin mining community is struggling to regain composure after the recent crash. Since May, 2022, bitcoin has fallen by more than 40% from its former glory and is now slowly declining from $19,000.
The crash brought down Ethereum and many other cryptocurrencies with it. A vortex of panic erupted violently in the form of a market selloff. As expected, the crisis has now spread to mining as it is one of the primary methods of obtaining bitcoins. It may not be the best way, but it is certainly the most risk-averse route when it comes to financial investments.
Since the start of the bitcoin decline, miners have reportedly sold more bitcoin than they actually produced. The typical strategy for mining is to sell a small portion of what you make and hold (HODL), counting on the price to rise for even more profit.
When the price of bitcoin dropped, miners saw no reason to hold on to their storage, at least in the short term. Bitcoin mining is generally ignored due to the massive energy consumption and high usage of graphics cards. The only thing that used the season against it was the steady payoff from rapid market movements.
With the only incentive out of the equation, perhaps temporarily, miners can no longer justify continuing to operate such tax operations.
bitcoin miners auction off their equipment
One of the main components of a bitcoin mining rig is the graphics card. Some favorite brands include AMD and NVIDIA as they make leading hardware for gaming.
Back when the market was running smoothly, gamers reported a shortage of gaming GPUs and high-end graphic cards. Most of these products were consumed by pool mining organizations that had a constant demand for processing power.
After the bitcoin crash, miners are salvaging whatever they can to avoid net losses, and that includes mining rigs.
Several online auctions are popping up on Chinese livestreams, offering high-end graphic cards and crypto GPUs at very low prices. You can find some of the most powerful gaming cards, like the (GeForce) RTX 3060 Ti in the more affordable range of $300 – $350.
Some of these devices look brand new while others look quite old, but the best part is that they will be able to run most of the latest games. Any aspiring crypto miner can see this as an opportunity to get started cheaply.
Bitcoin Mining – Where Does It Go From Here?
Things may be looking bleak for bitcoin mining as an industry, but it is certainly not dead. In fact, it’s far from dead. As former miners exit to wait out the chaos, new operators will take their place and invest in the plunge.
Bitcoin mining may be less profitable at the moment, but it has 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 is adjusted every two weeks.
It used to be much more difficult to mine due to the overload of competition in the network. Although it doesn’t take much time to resolve a transaction, if there are too many miners competing for it, the chances of any one person working on it are slim.
This is one reason why pool mining exists. They are huge organizations with thousands of rigs running day and night. Therefore, they always have a higher chance of being transacted than a single entity.
Now that miners are out of the race, the chances for smaller mining groups to compete have increased. It may not be much, and will eventually stabilize, but it could be a good opportunity for those who want to try their hand at bitcoin mining.
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