Many Bitcoin Miners Are at Risk of Turning Unprofitable

[alyssa85]

https://www.bloomberg.com/news/articles/2018-04-18/bitcoin-miners-facing-a-shakeout-as-profitability-becomes-harder

Even with the price back above $8,000, many of the so-called miners that perform the complex calculations to generate the digital currency are at risk of turning unprofitable. If prices drop below that threshold again for an extended period, there will likely be a swifter consolidation to industrial-scale mining. That could knock out the last guy-in-a-dorm-room operations and leave holders of the currency vulnerable to the dictates of the big miners.

“It’s totally different this year than last year,” Silicon Valley venture capitalist Bill Tai said in an interview. “The bitcoin mining industry was this mysterious dark cottage industry, and it’s about to grow up and about to have elements of institutional scalability at all levels."

Smaller miners will drop out, and only five to 10 of the largest will survive and be profitable, said Tai, who serves as chairman of Hut 8 Mining Corp., the capital financing arm in North America for Amsterdam-based Bitfury Group Ltd., one of the biggest makers of crypto-mining equipment. When the price of Bitcoin approached $19,000 last year, Bitfury had to turn some customers away as $1.9 billion of orders streamed in, he said.

More concentration could also hold a lot of sway over Bitcoin’s price. Miners hold between 20 percent and 30 percent of all Bitcoins, according to Lucas Nuzzi, a senior analyst at Digital Asset Research. Bitfury alone has mined more than 1 million Bitcoins, Tai said. The company has already sold coins to defray operating expenses. If miners are forced to sell more, that could depress Bitcoin’s price.

[Xester]

Mining will become unprofitable not to big mining farms but only to small miners. As bitcoins difficulty to mine is becoming harder and harder then it will be no longer profitable for small  miners. This kind of disaster will eventually result to the monopoly of mining to the giant mining farms. Such monopoly could bring about control coming from their sides. And I hope that will not occur.

[BrewMaster]

things aren't as drastic as the media has been portraying it.

first of all the price won't drop as big or as hard as before because it has already dropped nearly 70% and there is no more room for it to be pushed down. so even if we see a drop it will be smaller and slower.
this brings the second point which is the fact that miners aren't going to leave overnight. there may be a small drop in hashrate as some of them go and that doesn't affect anything at all. and quickly afterwards difficulty will adjust and the remaining miners will enjoy the same profit they were making.
it is also worth mentioning that not everyone is mining bitcoin to dump immediately at that time's market price to get the profit. many are mining to earn bitcoin and add it to their investment!

[KingScorpio]

https://www.bloomberg.com/news/articles/2018-04-18/bitcoin-miners-facing-a-shakeout-as-profitability-becomes-harder

Even with the price back above $8,000, many of the so-called miners that perform the complex calculations to generate the digital currency are at risk of turning unprofitable. If prices drop below that threshold again for an extended period, there will likely be a swifter consolidation to industrial-scale mining. That could knock out the last guy-in-a-dorm-room operations and leave holders of the currency vulnerable to the dictates of the big miners.

“It’s totally different this year than last year,” Silicon Valley venture capitalist Bill Tai said in an interview. “The bitcoin mining industry was this mysterious dark cottage industry, and it’s about to grow up and about to have elements of institutional scalability at all levels."

Smaller miners will drop out, and only five to 10 of the largest will survive and be profitable, said Tai, who serves as chairman of Hut 8 Mining Corp., the capital financing arm in North America for Amsterdam-based Bitfury Group Ltd., one of the biggest makers of crypto-mining equipment. When the price of Bitcoin approached $19,000 last year, Bitfury had to turn some customers away as $1.9 billion of orders streamed in, he said.

More concentration could also hold a lot of sway over Bitcoin’s price. Miners hold between 20 percent and 30 percent of all Bitcoins, according to Lucas Nuzzi, a senior analyst at Digital Asset Research. Bitfury alone has mined more than 1 million Bitcoins, Tai said. The company has already sold coins to defray operating expenses. If miners are forced to sell more, that could depress Bitcoin’s price.

only if they continue to run their miners, if the shut them down, they wont get losses. nothing special about that, i expeceted that, they have to diversify hope for respectable icos be minable.

[fiulpro]

Only the small one's would be affected I know it's totally unreasonable to say but Bitcoins would still be mined .

Those countries where rhe electricity is cheap and the places where they get discounts are the only place that can provide us stable minning.

No matter what happens but minning will continue and I don't think that price is gonna drop below that certain level too fast... And we are just at the start if the cycle ..it's been like this since forever .. minning was done even when the price was super low.

[KingScorpio]

Only the small one's would be affected I know it's totally unreasonable to say but Bitcoins would still be mined .

Those countries where rhe electricity is cheap and the places where they get discounts are the only place that can provide us stable minning.

No matter what happens but minning will continue and I don't think that price is gonna drop below that certain level too fast... And we are just at the start if the cycle ..it's been like this since forever .. minning was done even when the price was super low.

price of bitcoin drops because its losing attention,

under regional law,

all private enterprises must be threated equally, bitcoin isnt even allowed to be mentioned when there are so many competing altcoins.

[darkangel11]

We had this discussion a month ago and many people recognized the problem back then. The level of mining profitability is at least 1000 USD above the current price.
This is one of the reasons I initially thought we'll stay at 9k USD and once we fell below that I knew that we'll have to go back up. If BTC is to remain a functioning and popular asset it will have to go back to 10k pretty soon.

[gentlemand]

We had this discussion a month ago and many people recognized the problem back then. The level of mining profitability is at least 1000 USD above the current price.
This is one of the reasons I initially thought we'll stay at 9k USD and once we fell below that I knew that we'll have to go back up. If BTC is to remain a functioning and popular asset it will have to go back to 10k pretty soon.

Why should any of us give the slightest shit about how much money a miner is making? It's no one's problem but theirs. If they go out of business then someone else pops along to fill their place who can pull it off.

At the very extreme worst for the average user the blockchain will slow down for a while until another adjustment downwards if enough miners bail and that's about it.

And what do we know of their strategies? Some of them have so much money piled up that they may well completely shrug off unprofitable periods. No business is in eternal profit.

[Don Pedro Dinero]

We had this discussion a month ago and many people recognized the problem back then. The level of mining profitability is at least 1000 USD above the current price.
This is one of the reasons I initially thought we'll stay at 9k USD and once we fell below that I knew that we'll have to go back up. If BTC is to remain a functioning and popular asset it will have to go back to 10k pretty soon.

How is mining profitability calculated?

I remember John McAffee saying that it costed him $1,000 to mine a bitcoin and that was last year when price was about 3-4k.

I thought mining costs could drop if some miners ceased to mine.

[Wipro]

We had this discussion a month ago and many people recognized the problem back then. The level of mining profitability is at least 1000 USD above the current price.
This is one of the reasons I initially thought we'll stay at 9k USD and once we fell below that I knew that we'll have to go back up. If BTC is to remain a functioning and popular asset it will have to go back to 10k pretty soon.

I do mining with the Rx 470 ten cards for ethereum. I do not want the price to bump very soon because people move from ethereum mining will come again here. With the 10 cards I cannot make out big hashes and compete with them mate.
Hopefully you will find the bitcoin price alone at least go bigger in the market with in some months for sure.
So far I have mined around 3.4 ETH in 4 months time. Looking for more profit in future so hodling it mate.

[qyn0]

smaller miners will drop out, and only the largest will survive and be profitable

[cryptofeel]

A lot of people will need to upgrade their method of mining if they ever have to get anything meaningful in today's mining business. Mining is still lucrative.

[shield132]

https://www.bloomberg.com/news/articles/2018-04-18/bitcoin-miners-facing-a-shakeout-as-profitability-becomes-harder

Even with the price back above $8,000, many of the so-called miners that perform the complex calculations to generate the digital currency are at risk of turning unprofitable. If prices drop below that threshold again for an extended period, there will likely be a swifter consolidation to industrial-scale mining. That could knock out the last guy-in-a-dorm-room operations and leave holders of the currency vulnerable to the dictates of the big miners.

“It’s totally different this year than last year,” Silicon Valley venture capitalist Bill Tai said in an interview. “The bitcoin mining industry was this mysterious dark cottage industry, and it’s about to grow up and about to have elements of institutional scalability at all levels."

Smaller miners will drop out, and only five to 10 of the largest will survive and be profitable, said Tai, who serves as chairman of Hut 8 Mining Corp., the capital financing arm in North America for Amsterdam-based Bitfury Group Ltd., one of the biggest makers of crypto-mining equipment. When the price of Bitcoin approached $19,000 last year, Bitfury had to turn some customers away as $1.9 billion of orders streamed in, he said.

More concentration could also hold a lot of sway over Bitcoin’s price. Miners hold between 20 percent and 30 percent of all Bitcoins, according to Lucas Nuzzi, a senior analyst at Digital Asset Research. Bitfury alone has mined more than 1 million Bitcoins, Tai said. The company has already sold coins to defray operating expenses. If miners are forced to sell more, that could depress Bitcoin’s price.

There is nothing new said here. And yes, I'll say oppositely, this year isn't that different from last year. On 600$ people still mine and now, when we have 10 higher price, there is no worries. I think miners just want to make huge profit and that's all.
I could agree that Bitfury (not alone, with bitmain) is good and shit for bitcoin community at the same time.

[dothebeats]

https://www.bloomberg.com/news/articles/2018-04-18/bitcoin-miners-facing-a-shakeout-as-profitability-becomes-harder

Even with the price back above $8,000, many of the so-called miners that perform the complex calculations to generate the digital currency are at risk of turning unprofitable. If prices drop below that threshold again for an extended period, there will likely be a swifter consolidation to industrial-scale mining. That could knock out the last guy-in-a-dorm-room operations and leave holders of the currency vulnerable to the dictates of the big miners.

“It’s totally different this year than last year,” Silicon Valley venture capitalist Bill Tai said in an interview. “The bitcoin mining industry was this mysterious dark cottage industry, and it’s about to grow up and about to have elements of institutional scalability at all levels."

Smaller miners will drop out, and only five to 10 of the largest will survive and be profitable, said Tai, who serves as chairman of Hut 8 Mining Corp., the capital financing arm in North America for Amsterdam-based Bitfury Group Ltd., one of the biggest makers of crypto-mining equipment. When the price of Bitcoin approached $19,000 last year, Bitfury had to turn some customers away as $1.9 billion of orders streamed in, he said.

More concentration could also hold a lot of sway over Bitcoin’s price. Miners hold between 20 percent and 30 percent of all Bitcoins, according to Lucas Nuzzi, a senior analyst at Digital Asset Research. Bitfury alone has mined more than 1 million Bitcoins, Tai said. The company has already sold coins to defray operating expenses. If miners are forced to sell more, that could depress Bitcoin’s price.

There is nothing new said here. And yes, I'll say oppositely, this year isn't that different from last year. On 600$ people still mine and now, when we have 10 higher price, there is no worries. I think miners just want to make huge profit and that's all.
I could agree that Bitfury (not alone, with bitmain) is good and shit for bitcoin community at the same time.

Back when the prices are only 3 digits, the difficulty is low and profitability for big farms are high. Also, these manufacturers adjust their prices depending on the price of 1 bitcoin as well, so you can take that in to account. Right now, the only ones who will survive are the miners with huge farms that could take any price beating and still remain operational, while the smaller fishes in the ocean may be forced to turn off their miners for good--that is if the difficulty remained rising while the price remains flat.

How is mining profitability calculated?

I remember John McAffee saying that it costed him $1,000 to mine a bitcoin and that was last year when price was about 3-4k.

I thought mining costs could drop if some miners ceased to mine.

Depends highly on where you live since you need to consider power costs + your overall hashrate together with the difficulty and price/bitcoin. Difficulty might drop yet mining may still remain unprofitable if the price goes on a heavy crash or remains flat for a long time and the miner cannot keep up with the mining costs for long.

[squatter]

We had this discussion a month ago and many people recognized the problem back then. The level of mining profitability is at least 1000 USD above the current price.
This is one of the reasons I initially thought we'll stay at 9k USD and once we fell below that I knew that we'll have to go back up. If BTC is to remain a functioning and popular asset it will have to go back to 10k pretty soon.

The market might tend towards the cost of production, but there's no guarantee of that. You're accounting only for supply, not demand. If speculative mining were a sure thing, we'd all be doing it. Miners are taking huge risks and big losers will eventually shut down and sell at a loss rather than continue bleeding. Some miners are probably also leveraged and if the market gets bloody enough, they'll have to liquidate their entire operation. This has happened before.

Why should any of us give the slightest shit about how much money a miner is making? It's no one's problem but theirs. If they go out of business then someone else pops along to fill their place who can pull it off.

Concern trolls try to paint this catastrophic picture where all miners will collectively shut down at once -- conveniently ignoring the difficulty algorithm -- so that the blockchain grinds to a halt. Then they point to the top bubble price and say, "Look how much price fell! It's all crumbling now!" Never any mention of the long term investment plans of industrialized miners, those with subsidized energy and access to competitive chip production, etc.

At the very extreme worst for the average user the blockchain will slow down for a while until another adjustment downwards if enough miners bail and that's about it.

Exactly. Let the marginal miners shut down. Life goes on.

[merchantofzeny]

Mining will become unprofitable not to big mining farms but only to small miners. As bitcoins difficulty to mine is becoming harder and harder then it will be no longer profitable for small  miners. This kind of disaster will eventually result to the monopoly of mining to the giant mining farms. Such monopoly could bring about control coming from their sides. And I hope that will not occur.

That would be a sad irony for a decentralized currency to be within the hands of only a couple of miners. If some miners fold then the profitability might go up a bit I suppose but it would definitely be the smaller ones that would go. I wonder if any new miners would appear if it's all mined out and every miner have to rely on transaction fees for income.

[onnz423]

There are plenty of other coins to mine, some of which are more profitable to miners. However, even so, bitcoin has dropped in value by almost 70%, once it bounces back past $10,000, and eventually nearer to $20,000 it will begin to become much more profitable to mine. This is likely to happen at some point, so it's still a good idea to mine even if you are slightly below ROI.

[darkangel11]

I do mining with the Rx 470 ten cards for ethereum. I do not want the price to bump very soon because people move from ethereum mining will come again here. With the 10 cards I cannot make out big hashes and compete with them mate.
Hopefully you will find the bitcoin price alone at least go bigger in the market with in some months for sure.
So far I have mined around 3.4 ETH in 4 months time. Looking for more profit in future so hodling it mate.

And this is what other small miners are doing. Those who can afford to hold are holding which limits the amount of new coins being sold on exchanges. Supply reduction usually means increasing prices (as long as the demand doesn't fall in an even greater rate). I'm pretty sure once this crypto winter is over all coins will go back up, even shitty ones like XRP

Depends highly on where you live since you need to consider power costs + your overall hashrate together with the difficulty and price/bitcoin. Difficulty might drop yet mining may still remain unprofitable if the price goes on a heavy crash or remains flat for a long time and the miner cannot keep up with the mining costs for long.

It's not only the power cost and the hashpower that you have because our hashpower came at a price. You had to buy your miners at some point and at that point you had to calculate your ROI. If the price falls below that range you will always be at a loss.
There are many things that influence your profits but the most important are: price of the coin, value of your hardware, power cost and mining difficulty.

Some miners are probably also leveraged and if the market gets bloody enough, they'll have to liquidate their entire operation. This has happened before.

Yes, 2015 was probably the worst year so far with the 2014 cloud mining boom followed by tanking prices.

Why should any of us give the slightest shit about how much money a miner is making? It's no one's problem but theirs. If they go out of business then someone else pops along to fill their place who can pull it off.

You're right, we shouldn't care about their profits, but the prices going below their profitability is usually a bad sign. It happened before and ended up with the price going down for 2 years to reach levels from mid 2013 in 2015.