Bitcoin Miners Are Giving Up

Bitcoin Miners had started the year with a smile across their face, 11 months later their smiles seem to have turned upside down. According to the third largest mining pool F2Pool, between 600,000 and 800,000 Bitcoin miners have shut down operations since mid-November.

The majority of miners that have shut down are the ones who are using old Bitcoin mining machines such as the Antminer T9+ and AvalonMiner 741. The issue with the older miners is that it has a hash power of around 10 TH/s and thus losing money right now. Even F2pool is seen recording loses at the current period, stating that larger more equipped mining firms are having issues too.

Prices lowering to below $4000, with electricity costs and the productivity of certain mining machines being too low has resulted in an overall loss.

In an interview with Coindesk, The founder of F2Pool Mao Shixing said:

“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,”

Mining Difficulty Falling

BTC mining difficulty is defined as the complexity of the task that miners need to solve to create the block, which is the most challenging part of the equation. It all boils down to the hash rate of the network which depends on the number of miners who mine. Basically, if the number of miners falls, the difficulty starts falling due to competition reducing while vice versa occurs when the number of miners rises.

With the number of miners falling, the total mining difficulty has dropped too. Hence this may be a reason for the remaining miners to stick around.

Technically Bitcoin’s mining difficulty has a lag of about 14 days to the hash rate changing. The next change in Bitcoin mining difficulty is after 794 blocks which are 6.5 days according to Bitcoin Wisdom.

Blockmanity’s Take:

The Bitcoin hashrate increased astronomically over the year even though the prices were falling. Some miners were also mining at a loss but not shutting down the machines. But now the prices are way down for the miners to sustain and so they are forced to shut down the machines.

But it is important to remember that Bitcoin is designed to withstand this. It’s not the end of the world that miners are backing off when miners start shutting down the machines the hashrate automatically drops which is what is happening now. But once it is profitable again to mine Bitcoin, the miners will jump back and resume their operations and so on.

Image Source – Flickr

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