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Comparing the Cryptocurrency Mining Industry Struggles of 2018 to the Future of 2019

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Crypto mining is one of the key aspects of the crypto space, and a driving force of blockchain technology. However, due to the bear market and other problems which the industry faced in 2018, a significant lack of popularity of this particular industry was noticed. Not only that, but even the existing miners decided to abandon mining farms and find some other way of making a profit through digital currencies.

GMO Loses $320 Million

According to last year’s reports, Japanese internet conglomerate, GMO, experienced huge losses in the last quarter of 2018. The loss was not expected, and the company itself admitted as much. As a result, they had to leave the mining business which they originally entered only several months earlier, in June.

At the time, the company wanted to become a competitor to the largest crypto mining firm in the world, Bitmain. They used 10% of their own resources and capital to start the mining business, after obtaining advanced technology and developing methods which would ensure lower power consumption. However, this was not enough, as the company did not fully consider the actual size of Bitmain operation.

At the time, Bitmain was seeking a valuation of more than $15 billion, while GMO valued at only 10% of that amount. Bitmain itself, on the other hand, knew what to expect, and they were more than ready to meet the challenger and squeeze the would-be rival out of the industry. This eventually occurred on December 25th, 2018, when GMO decided to call off the mining operation.

As a result, the company lost $320 million instantly, and they assessed that it would be difficult to sell mining gear at this point, which is to say that the losses cannot be compensated in such a way.

Bitmain Itself Had A Difficult 2018

While Bitmain was more than capable of handling some new competition, recent reports state that this company also experienced losses in previous years. At one point, Bitmain sold many of its miners, and it attempted to establish dominance over the industry by entering a price war which its competitors would not be able to afford.

It is important to mention that this happened before the second market crash, while Bitcoin’s price was between $6,400 and $7,000, which still allowed the company to make money, even if it made some risky moves in this period. The demand for mining was still relatively high at the time, and the company was not as worried about its losses.

The November market crash which eventually brought Bitcoin to the price of $3,200 marked a big turnaround, however and Bitmain experienced struggle as well, with a negative profit margin of over 11%, according to reports. The reports also mentioned that Bitmain might actually not be losing that much, as the costs of mining have likely dropped as well, but there is no doubt that the company is losing money instead of gaining it.

Other reports say that Bitmain had to lay off around 50% of its workers in Q4 2018, with one Bitmain employee confirming that the actual percentage is even higher. In fact, this individual stated that some departments would have to be let go entirely because of the market situation.

This is in sharp contrast to Bitmain’s announcements made earlier in the year, when the company stated that it plans to become a competitor to AMD, Intel, and nVidia. At this point, Bitmain still had a very successful crypto mining business to back up its expansion to completely new industries.

At the time, the company’s officials stated that there are numerous similarities between AI chips and chips used for BTC mining. Because of this, the company planned to enter the AI development industry by using its existing mining chips designs for powering the AI systems. The problem that Bitmain did not anticipate (which is quite common for companies that attempt to expand in this way) was too aggressive diversification of its products and services.

The firm attempted to expand beyond crypto mining without improving their business models and core products, which has been a downfall for many others as well.

It Is Not As Bad As It Seems

According to statistics provided by a crypto market data provider Blockchain, Bitcoin’s hash rate has seen a significant impact in Q4 2018, going from 61 exahash to only 44 exahash in the last several months. During the same period, crypto miners started leaving the market in greater numbers, as mining was no longer profitable. The low price of Bitcoin was not enough to cover the high costs of the mining process, and multiple mining farms had to shut down.

However, experts believe that the situation will take a turn for the better, and that “smart money” is waiting for this to happen, although it might not be a quick, overnight shift. In fact, many believe that Bitcoin has yet to find its bottom, with estimates that this might occur in February 2019.

Another thing worth mentioning is that the current “low” hash rate of Bitcoin (44 exahash) is still much larger than the one that was recorded in early 2018 when it was at 17 exahash. In other words, even after a severe drop, Bitcoin hashrate is still about 158% larger than it was a year ago.

Despite the fact that miners are leaving, large mining facilities are not likely to abandon the mining industry. If an individual cloud miner decides to exit the space, their losses would be small. However, if an entire mining center which has signed a long-term contract with electricity providers and has bought large amounts of expensive mining gear were to abandon the space, their losses would be devastating.

In addition, many agree that miners tend to have a long-term perspective. Otherwise, they would not go through the trouble of obtaining expensive equipment and entering deals with electricity providers.

Due to bright predictions regarding the future of mining, several tech giants such as Intel and Samsung are keeping an eye on the industry, with Intel even acquiring patents for high-performance energy-efficient BTC mining. As for Samsung, the company has reportedly started with the production of mining rigs and mining chips in Suwon, South Korea.

What Will Happen In 2019?

While it is not possible to accurately predict future trends and events, a lot of large-scale mining companies are expected to continue with their operations, despite losses. While they may be losing money now, the long-term strategy remains the same. A lot of it also depends on the prices of digital assets, which are still quite low.

However, while a recovery expected to start in 2019, there is no way to tell when it will arrive, or whether it will actually start, at all. For a while, at least, large corporations such as Bitmain can afford to mine while the prices are low, at least for a while longer. In other words, even though individual miners have left the mining industry due to the bear market, mining facilities will not follow, and the crypto industry should remain functional until the individual miners’ return.

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BTC Could “Easily” Surpass Gold in 20 Years. Mike Novogratz Says

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Many people believe that cryptocurrencies represent a revolution of similar or superior importance to other significant events such as the appearance of the Internet. The introduction of Bitcoin (BTC) and its characteristics have enthused thousands of investors and influencers with increasing effusivity.

While some believe that cryptocurrencies will disappear due to their lack of intrinsic value, others like Mike Novogratz think that blockchain technologies, and especially Bitcoin, can surpass gold as the primary means of storing value in the world.

BTC MARKETCAP COULD EASILY HIT 8 TRILLION

In an interview with Anthony Pompliano, Mr. Novogratz explained that in a span of about 20 years, Bitcoin could “easily” increase its marketcap by 100x, if technological and legal developments continue to facilitate its adoption. This would imply that we would be talking about figures close to 8 Trillion dollars in total marketcap for Bitcoin alone in the next two decades:

Gold’s got an $8 trillion market cap, or a $7.5 trillion market cap. And so, we’re 100x off on that. We’re not going to get there in Bitcoin in the next year or two. But over a 20-year period, could that happen? Easily. Easily. And that’s giving zero optionality to all the other stuff. And so I think it seems like a pretty smart portfolio bet

Novogratz has always defended the idea that Bitcoin will start a new Bull run when governments develop more specific regulations that appeal to institutional investors. In this regard, he explains that it is only a matter of time before large capital investors enter the space:

“I know Goldman for instance is gearing up around securities tokens. They’re not doing anything yet, but they’re getting really ready and looking at all the questions on – where would you store them? Do you have to build your own custody, or can you use someone else’s custody? How to get them to work.

Listen, the regulatory framework isn’t there yet on security tokens. We’re working really hard on our security token business and we’ve got, I think, some cool things in the hopper.”

BOW DOWN AND THANK SATOSHI!

Finally, in the climax of the interview, Novogratz’s enthusiasm was such that he even said that people should bow down and thank Satoshi Nakamoto for creating Bitcoin (BTC).

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Bitcoin Price Consolidation Continues, Downside Break Looks Likely

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  • Bitcoin’s current trading range of $3,920–$4,055 could be breached to the downside, as last week’s doji candle created at the key 21- week moving average resistance is signaling bullish exhaustion.
  • A downside break of the trading range, if confirmed, could yield a sell-off toward the support levels lined up at $3,775 and $3,658.
  • On the higher side, a UTC close above $4,055 is needed to put the bulls back into the driver’s seat, although that looks unlikely at press time.

Chart signals of bullish exhaustion suggest bitcoin’s (BTC) narrowing trading range could soon be breached to the downside.

The leading cryptocurrency by market value is sidelined below $4,000 for the fourth straight day, and has been restricted to the narrow range of $3,920–$4,055 since March 17, according to Bitstamp data.

More importantly, prices clocked a high and low of $4,055 and $3,920, respectively, last week before closing Sunday (UTC) largely unchanged at $3,970. The price swing formed what’s termed a doji candle on the weekly chart, which is usually taken to represent indecision in the marketplace.

The candle, however, has appeared following a 20 percent rally from lows near $3,300 seen at the end of January. So, it could be argued that the indecision, as represented by the doji, is predominantly among the buyers.

As a result, the probability of BTC ending the ongoing consolidation with a convincing break below $3,920 appears high.

As of writing, BTC is trading at $3,970 on Bitstamp, largely changed on a 24-hour basis.

On the daily chart, the short-term MA studies are now biased toward the bears, with the 5-day MA having dropped below the 10-day MA. Further, with the price well below the March 21 high of $4,055, the bearish outside-reversal candle created on that day is still valid.

So, the sideways channel seen in the 4-hour chart could be breached to the downside in the next day or two.

A range breakdown if confirmed would open the doors for a deeper drop toward $3,658 (Feb. 27 low).

A UTC close well above $4,055 would revive the short-term bullish view and could yield a rally toward $4,200, although gains may be short-lived, as the 21-week MA is still trending south.

The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

This article is intended as a news item to inform our readers of various events and developments that affect, or that might in the future affect, the value of the cryptocurrency described above. The information contained herein is not intended to provide, and it does not provide, sufficient information to form the basis for an investment decision, and you should not rely on this information for that purpose. The information presented herein is accurate only as of its date, and it was not prepared by a research analyst or other investment professional. You should seek additional information regarding the merits and risks of investing in any cryptocurrency before deciding to purchase or sell any such instruments.

source:coindesk.

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What will it be for Bitcoin? $5,500 or $3,000?

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Although the world’s most popular cryptocurrency is still trading in its long-established range between $4,000 and $4,100, some analysts believe the moment of truth for Bitcoin is near. What will it be for Bitcoin? $5,500 or $3,000?

Bitcoin has been trading between the $4,000 and $4,100 range for the last 10 days, and today Bitcoin’s trading behaviour was no different. Bitcoin is currently trading at a price of $4,020 while showing a minor loss of -0.24%, according to coinmarketcap.com.

Most analysts are looking at the upper bound of BTC’s current trading range, the $4,200 price mark, which will most likely act as a level of serious resistance again.

However, a Switzerland-based cryptocurrency analyst, who goes by the Twitter handle, Crypto Krillin, recently took to Twitter to state that the moment of truth for Bitcoin is very near. According to the crypto trader, or BTC will fly straight towards the $5,500 price mark, or we will re-visit $3,000.

Read more: Bitcoin or Gold? Or both?

The Swiss cryptocurrency trader is not the only crypto analyst who seems to be convinced that Bitcoin’s upside target currently exists around the $5,500 price mark.

Just a few days ago, Chepicap reported that Galaxy, another popular cryptocurrency analyst on Twitter, explained to his nearly 50k followers that Bitcoin is pointing to a promising potential for the number one cryptocurrency, hinting to an imminent surge of 35% to $5500.

Despite many analysts reporting optimistic views on Bitcoin’s near-future upward breakout, another widely recognized cryptocurrency trader known to the Twitter community as ‘The Crypto Dog’, recently came forward stating that it is still possible for Bitcoin to drop to $3,500 in the short term, adding that the market conditions haven’t changed over the last several days.

Read more: Bitcoin can surge as high as $400,000

According to crypto technical analyst known as DonAlt, we can only conclude crypto winter is over until Bitcoin crosses the $4,600 threshold and moves towards $5,000 and $6,000.

‘Volume isn’t what will convince me that the bear market is over’, he said. ‘A bullish market structure along with a break of at least $4.6k is. It’s interesting that we’ve had so many altcoin pumps while the general market cap hasn’t really changed. That makes me think there is very little new money coming in.’

Source:chepicap

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