With the ETH price currently riding at $396 right now, it’s a great loss from the January prices that went up to $1,390. One of the integral factors for this drop in ETH value is the mining as there has been a huge influx of miners that have increased the difficulty while decreasing the profitability from mining an ETH.
ETH price lost about 70% of its value since January
It’s been only 3 years since Ethereum’s inception into the cryptocurrency market. ETH was only $1.6 in 2015 that reached about $12 in the mid of 2016. In April 2017, it’s price was only $50 that reached approximately $380 in mid-June. During the month of November 2017, there has been a dip in ETH prices but it didn’t fall below the $280 level. The ethereum prices went through a great period at the end of 2017 and the beginning of 2018 with its prices reaching to $800 in December and a whopping $1,390 in mid-January.
However, ETH price is down to $396 level right now. Since January, ethereum has lost about close to 1,000 US Dollars and taken a dip of 70 percent.
Apart from speculations, ethereum price also factors in the mining profitability. Currently, ethereum mining generates mining profits of about $80 per month.
With the prices of ethereum being at the level of $400, it offers a considerable amount of incentive for the miners to sell ETH at higher prices.
ETH miner numbers & mining difficulty up, price and profitability down
The rise in the ETH value attracted the crypto miners that were looking to make some quick bucks. With the rise in the popularity of ICOs, ethereum also rose parallelly in the crypto space and have reached the second spot. But now as the prices of ethereum are dropping over the weeks, the mining difficulty rises as well.
Moreover, as the mining and miners rise, the GPUs manufacturing companies like NVIDIA are introducing the idea of crypto mining specific GPUs. This further brings about an influx of miners that are using mid-range GPUs to mine ETH.
As the number of miners rises, the potential of profitability lowers significantly. This, in turn, means miners are deferring selling their coins for the time when prices will rise again.
Right now, the hash rate is twice or thrice the times of the May last year rate. At that time the price of eth was $120 that is approximately 10 fold of January 2017’s price i.e. $10. This means the real price of ethereum would be about $100-$300 which is currently the price in the market.
At the time, when people can easily get their hands on GPU cards, it is quite unlikely that the hash rate which is increasing at the rate of 1000 GH/s per day, will rise in the short term. Hence, the current rate i.e. ~60000 Gh/s represents an increase in mining difficulty, which is currently close to 3.3THash at the rate of 1-2 percent per day. As the difficulty rises, the mining machines pull a lower amount of ETH per hour compared to previous times.
This, in turn, creates a tension between the miner’s selling pressure and an influx of investment into the market. As the profitability of the ethereum mining dries, the price gets affected negatively.
Do you think the mining factor will affect the ETH prices more severely?
I am an associate content producer for the news section of Coingape. I have previously worked as a freelancer for numerous sites and have covered a dynamic range of topics from sports, finance to economics and politics.