As Bitmain closes its Amsterdam mining operation we ask when do miners stop and at what price?
Chinese mining giants Bitmain are set to close their Amsterdam office, the company announced on Monday. This follows the announcement in December that it had closed its Israeli branch. No timeline for the move has been released. They may not even open the Texas operation.
The Company commented “As we build a long-term, sustainable and scalable business, we are making adjustments to our staff and operations. This includes the decision to close our Amsterdam and Israel offices”.
The company is said to be going through a leadership reshuffle and plans to IPO are to be put on hold until further notice. But the company are still considered to be a powerhouse with valuations in around the $15 billion range.
Since the equipment is so costly the price of Bitcoin is said to be under the breakeven threshold, which is said to be around an average of $4000.
Much depends on the mining location, in all the countries in the world, Venezuela is said to be the crypto mining haven due to the fact that it has the lowest electricity costs in the world, with only $0.002 per kWh.
- In the US, it costs about 12 cents per kWh
- In Europe, it varies from 9.6 cents to 30 cents per kWh
- The number also means that one can mine 1 BTC with less than 600 USD cost
Mongolia is becoming the new destination for miners, it is said that at least 1000 miners will be set up in the nation by the end of 2019. Although it only last October, Ginco Mongol plans to increase the number of units it has dedicated to Bitcoin mining from 600 to 1600 by the end of the year.
In December, Bitcoin blockchain observers figured out that the original cryptocurrency’s hash difficulty had dropped by more than 15%. This is the second largest contraction since October 2011.
What is a Hash rate?
The hash is the output of a hash function and as it relates to Bitcoin, the Hash Rate is the quickness at which a computer is completing an operation in the Bitcoin code. A faster hash rate is better when mining as it increases your opportunity of finding the next block and receiving the reward.
Malachi Salcido, the head of Salcido Enterprises, one of the largest mining facilities in the U.S “I expect where we are at to possibly get a little worse before it gets better. Like all market bottoms, smart money is watching for the turn, that doesn’t happen usually quickly. It wouldn’t surprise me if the bottom is finally in February,”
So what’s next?
If the hash rate improves which some reporters are suggesting already and we see a price recovery Bitcoin mining will improve and come back with a bang. Interestingly the bigger mining shops are consolidation and noticing that they can pick up equipment from the faltering operations of other miners. Like in any industry it became oversaturated, now only the strongest will survive or adapt. Chip makers like NVIDIA are struggling with the demand drop off and the resale of second-hand equipment. All markets are based on supply and demand, keep a close eye on mining stats as if there are more firms falling into the abyss there is a potential that the price may rise further. On the other scale, the demand can be tracked by the volume at the exchanges. Binance, BitMex etc often release statistics on the volume running through their exchanges. It pays dividend to watch this and check out the demand points in comparison to the number of coins mined.