Crypto Miners Are Being Destroyed

I normally like to write about positive things in crypto but that's become a little bit of a challenge. I'll have one for you later today however! If you thought you took a beating in the recent sell offs have you stopped to think about how miners are doing?

Mining

Primarily mining is done with Asic for Bitcoin and GPUs for Ethereum. Many of these miners have been selling at a premium and are often sold out before they even hit production! While ASIC systems have one purpose only and that's to mine bitcoin (along with some other rather lackluster cryptos that run on the same algo) GPUs on the other hand have many use cases outside of mining.

The Hash Rates

Bitcoins hash rate over the last three years

There hasn't been much change yet in terms of the hash rate of bitcoin. That crash you see from 2021 to 2022 in the middle there was when China announced it was kicking all bitcoin miners out. We can see it didn't take long for that to recover and beat it! When you really look at this chart you see nothing but a rather steady trajectory upwards.

This is most likely due to major companies now mining bitcoin so their operations continue to run no matter the price swings. Many of these have also invested in infrastructure of solar, wind etc which has minimal upkeep costs and continue to provide power to these mining systems.

Ethereum hash rate over the last three years

Looks much the same however has been hit with some shutting down on miners. This most likely will tank as Ethereum inches closer and closer to being a proof of stake token in which GPU miners will become pointless and instead it will be all about owning ETH tokens and staking them. This is most likely going to cause a huge surpluses in GPUs. In fact prices on new GPUs are already dropping in many cases I can now get a 3080 for about $800 - $900 and just last month would run me well over $1,000+

Get ready to see a bunch of used GPU cards hitting the market as well. If you ever wanted to build a solid gaming system and that GPU cost was holding you back wait a few more months and you should be able to grab up one heck of a deal. Also rumor has it the 4080 or if they skip to the 5080 will be coming out mid July thus further decreasing the value of these 3080 gpus and below.

The Miners

Not only do you still have a increase in mining hash rate making your asic systems less and less profitable but you also have a drastically huge reduction in price. Many miners or companies might soon find themselves needing to liquidate their assets unless the built a long term renewable plan.

Companies like RIOT Blockchain although off their all time highs still hold a rather decent price level. Hut 8 also commanding a decent price at the moment along with others. However these might be short lived and it will be interesting to see their profits come the next quarter and if they will remain in operations.

Here's the cool thing about what's happening right now. This sell off and correction removes many of the bad eggs in the system. The ones that didn't build solid foundations and create a real value and wealth behind their systems. This is much like the 2017 rally in which shit coins became a huge thing. Nearly 95% of those shit coins are now gone and what came of it where solid legitimate projects many of which we still see today like Polygon(MATIC).

These corrections are nessasrly in order to fish out and remove the over hyped worthless projects and products in the system. I estimate however this crypto winter wont last anywhere near as long as the last.

Are you mining yourself?

Posted Using LeoFinance ^Beta