- Bitcoin miners unable to pay their power bills
- Most affected are those using high-energy older mining rigs
- Rigs are being sold at an 80 percent discount
The bitcoin price slump has rendered cryptocurrency miners in China unable to pay their electricity bills. Some small and medium-sized miners China’s Xinjiang and Inner Mongolia are selling off their rigs as scrap metals.
Chinese Bitcoin Miners Hit Badly
According to an announcement on China’s crypto-focused news outlet 8BTC on Wednesday, November 21, 2018, the selloff started as the global cryptocurrency market experienced a widespread decline throughout the entire last week, declining to close to $4,100 per coin.
Per the story, most miners who have been using older high consumption machines could not cover their electricity costs and were selling the rigs by the kilo, according to a post by F2Pool on the Weibo social media platform. The post by F2Pool stated:
“Older mining models, including Antminer S7, T9, and Avalon A741 [mining machines] have already reached the ‘shutdown price’ — the critical BTC price below which miners have to be shut down for lack of profitability. Ironically, a mining rig is only worth one-twentieth of what it was the same time last year.”
Cryptocurrency mining is a high-electricity consumption activity and most miners are not unable to meet the cost of power. The most affected are those using older models such as Antminer S7, Antminer T9, and Avalon A741, which have reached their “shutdown price.”
The market slump in the last few weeks has seriously affected miners with some selling off their machines on the scrap market for up to 5 percent of their original prices. Mining rigs that were bought at over 20,000 Yuan ($2,885) just one year ago are now selling at about 1,000 Yuan ($144). Commenting on the situation, a Reddit user commented:
“Almost no one, with good reason, is willing to buy secondhand fans and PSUs from miners. I wouldn’t buy parts from a mining rig even at an 80 percent discount.”
Pundits Blame BCH Hash-war for Price Slump
Bitcoin (BTC) prices and those of other cryptocurrencies have continued to fall since the Bitcoin Cash (BCH) hard fork that took place on November 15, 2018. The updates caused a serious sibling rivalry between the two forks with many exchanges around the world suspending BCH trading and withdrawals until the dust settles. Leading cryptocurrency exchange Kraken warned its users calling one of the forks “a high-risk investment.”
The ripples caused by the Bitcoin slump have been felt far and wide with Washington-based mining firm Giga Watt declaring bankruptcy last Monday. Bitcoin was trading at $4,298 Thursday night with a market cap of $74 billion but amidst all the gloom, a crypto venture capitalist Lou Kerner has predicted Bitcoin will survive the current storm like Amazon did during the 1990s internet bubble.
