Bitcoin’s Hashrate Plunges, “Miners Sold by the Kilo” Trends in China

Bitcoin’s hashrate has suddenly fallen by nearly 50% from a high of 62 quintillion/exahashes a second to 34 quintillion at the time of writing.

This is the first time bitcoin’s hashrate has fallen since 2015. It kept going up and up even as price fell for much of this year, but after bitcoin breached key support at $5,000, that now seems to have changed.

A video has been circulating recently of asics being dumped on the streets. Some suggested theses were old footages from a flood in July which destroyed many asics, but the co-founder of one of the biggest mining pool, F2Pool, says this situation of asics on the street has developed recently.

“After yesterday’s market crash, tens of thousands of miners were shut down by our clients,” F2Pool’s co-founder said, referring to bitcoin’s sudden price drop on November 14th and 19th.

A picture has gone viral in China, trending on Baidu and other social media. A very rough translation says the miner has to be shut-down, but it is impossible to sell on the second-hand market, can only be sold by the kilo.

Sichuan and other mining hot zones in China have apparently experienced a dry season, so power costs have increased, making bitcoin mining unprofitable for about half of the miners going by the hash fall.

Canaan, one of the biggest asics manufacturer, has apparently let its application for an Initial Public Offering (IPO) lapse.

They were hoping to raise $400 million in Hong Kong’s stock market, but now no longer plan to have an IPO this year, ostensibly because regulators were asking many questions about its business model and prospects.

While in US, a small mining firm, Giga Watt, has declared bankruptcy. They apparently owe $7 million to unsecured creditors, including nearly $1 million to electricity providers.

Making this a repeat of 2015 when after a relentless bear market, miners started going under. The network itself isn’t affected due to the difficulty adjustment.

In order to keep the blockchain running at an average of about one block per ten minutes, the more miners are added, the more difficult it becomes to find a block per each miner.

The reverse applies too. The less miners there are, the easier it becomes to find a block per mining machine. So keeping the network in an equilibrium and responsive to price movements.

That makes mining a pretty risky business, with many in China losing quite a lot of their investment in asics.

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