Bitcoin's price erodes due to rising operational mining costs
Image source: pixabay - TheDigitalArtist
We have had a long series of tax regulations, cryptocurrency bans by governments, price speculation as well as new technologies, hard forks and large companies joining the crypto market. As Bitcoin mining reaches its technical bottlenecks, ASICs mining could not resolve the scale of the current crypto market.
A commentary was made on the journal Joule addressing "Bitcoin's Growing Energy Problem" written by Alex de Vries, from the Experience Center of PwC, Amsterdam, the Netherlands. The Bitcoin network consumes at least 2.55 gigawatts of electricity and is estimated to consume 7.67 gigawatts in the future.
Mining costs are not limited to the electricity used to run the computational work for Bitcoin transactions. Cooling costs, mining facility rental, manpower, equipment cost and maintenance are just some of the auxiliary costs required to run a Bitcoin mining facility. With the difficulty of the algorithm and the hashrate of Bitcoin going upwards, the block rewards have been greatly reduced. It could be soon that Bitcoin will be no longer profitable to mine.
Image source: pixabay - Reisefreiheit_eu - Bitmain Antminer
ASIC mining industry in danger
ASIC miners often use Antminers or SHA256 based miners that are designed to mine a certain coin. ASIC farms cannot switch to mining another coin easily with their inflexible machines and will not be able to sell them off as they do not serve any other purpose, other than Bitcoin mining.
Falling Bitcoin prices and high operational cost could render the current Bitcoin mining facilities in the red zone, losing money as they have to resort to swtching off their miners and unable to recuperate operational costs. But this has been anticipated by cloud mining companies who sold mining contracts to customers for a more stable income, in case such events occur.
Ethereum Rising
It is no joke that Ethereum is catching up on Bitcoin to become the No.1 cryptocurrency. Ethereum is reaching its 3rd peak soon, with the first peak that happened on June 2017 and the second in Feb 2018. We are talking about the ETH/BTC prices not ETH/USD prices. Within the cryptocurrency network of coins, Ethereum is definitely gaining much more value against Bitcoin the the past months. Ethereum's market cap was only one-third of Bitcoin's in Jan 2018. But today, Ethereum stands at 18 percent while Bitcoin hovers around 37 percent - Ethereum is currently at the halfway mark to surpass Bitcoin.
In addition, Bitcoin Cash [BCH] and EOS are doing quite well for Q2 2018. What will happen to Bitcoin when the mining stops? Will their Lightning Network be fast enough to mitigate the scalability issues?
-tysler
Image source: coinmarketcap - Ethereum's 3rd Peak
Image source: coinmarketcap - Total Market Dominance BTC vs. ETH
