Naysayers have always established that ‘It is No-Longer To Profitable to Mine’ looking at the current prices and analyzing it with the mining difficulty and total hash rate of the network. However, leading Bitcoin expert and proponent Andreas M. Antonopolous states that the average bitcoin miner is still making a profit.
Moreover, he accepted the possibility that some of the miners might be incurring loss today to gain from the increase in price in the future. However, that is not true to the entire industry which is continuously being made profitable in its newest versions of mining hardware.
He said in a video blog that:
“Ofcourse, some miners are gonna take risks… and effectively mine at loss today in anticipation of an increase in price in the future… This can work for small scale miners.”
Furthermore, new mining equipment is being designed and developed with increased vigor in the current markets. Hence, according to Antonopolous the apparent average of the entire mining industry is zero. However, the dynamic margins for the miners are constantly changing with time. Hence, the newest and better-managed mining farms continue to make a profit.
Antonopolous made a simple argument to the most important question for Bitcoin miners:
“How do you know the average miner is always profitable? Because they are still running. If they weren’t profitable they would have turned off.”
How China’s Ban Could Favor Everyone Around the World?
In his explanation of the mining industry Antonopolous also hinted at what could happen if China decides to clamp-down on its mining scene.
The Bitcoin algorithm was designed to adjust the mining difficulty every two weeks depending on the network statistics to maintain equilibrium. Hence, if China shuts down its miners, it would mean more profit for the rest for the world.
Reportedly, China houses around 70% of the mining power of the world. Hence, the boost to the rest 30% is expected to be huge. However, it will be short-lived as the rest of the world will also get in on the action looking at high profitability. Old-miners with currently outdated equipment could also choose to switch on their hardware during the incubation period.
However, if mining is banned in China, in the short term, the miners would look to dump their hardware for a loss.
Nevertheless, China is also the leading manufacturer of mining hardware and electronic chips. Hence, the economy of China would continue to prosper through exports of mining hardware. The mining industry would also scatter to more favorable locations with renewable energy, cold climates and lenient regulation towards Bitcoin and cryptocurrencies.
Do you think that the Chinese Government will go ahead with the ban? Will the prices go or down post the ban? Please share your views with us.
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Nivesh from Engineering Background is a full-time Crypto Analyst at Coingape. He is an atheist who believes in love and cultural diversity. He believes that Cryptocurrency is a necessity to deter corruption. He holds small amounts of cryptocurrencies. Faith and fear are two sides of the same coin. Follow him on Twitter at @nivishoes or mail him at nivesh(at)coingape.com