In the face of dismal profitability, Bitcoin miners are looking for new ways to stay afloat

In the face of dismal profitability, Bitcoin miners are looking for new ways to stay afloat

by CNBCTV18.com IST (published)

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Bitcoin mining rigs are able to do other tasks besides mining only. This is the first thing the big hosting companies take advantage of to last this crypto winter. Applied Blockchain, one of the largest hosting companies in the world, recently renamed itself Applied Digital to refer to expanding its reach beyond just mining.

These are tough times for bitcoin miners. Crypto Winter Fever Bitcoin Prices Frozen in the $19,000 Range. Moreover, Bitcoin mining difficulty saw a 13.55 percent rise on October 10, its largest increase in 2022, and could see another increase on October 23. This could have a significant impact on the profitability of bitcoin mining.

Until six months ago, bitcoin mining was a profitable practice. This was because the price of BTC was much higher, which allowed miners to operate their mining rigs at full capacity and generate significant profits. However, a lot has changed since then. With BTC dropping below $20,000, miners are barely able to recover their costs, even with the best conditions, equipment and electricity prices.

Of course, mining is not easy money anymore, and miners are looking for other ways to earn money. In this article, we go over some of the other sources of income that miners are exploring and how this works for both retail and big mining companies.

high performance computing

Bitcoin mining rigs are able to do other tasks besides mining only. This is the first thing the big hosting companies take advantage of to last this crypto winter. Applied Blockchain, one of the largest hosting companies in the world, recently renamed itself Applied Digital to refer to expanding its reach beyond just mining.

While the renaming has yet to be endorsed by stakeholders, steps have already been taken to move towards High Performance Computing (HPC). There may be a continuous winter in cryptocurrencies, but the world’s use of computing power and the Internet is only increasing, so there is always enough demand.

Applied Digital CEO Wes Cummins said during a recent earnings call that the devices currently owned by Applied Digital are programmed for use “in relation to image processing, graphics rendering, artificial intelligence and machine learning.”

Another big player in mining is Hut 8, whose CEO has publicly announced its hub for HPC to get through the winter. The move, he said, would include “the ability to leverage our GPU machines to provide artificial intelligence, machine learning or visual effects services to customers and mine the next most profitable digital assets to prove work during idle time.”

Buy the competition or bet the mining difficulty

It’s survival of the fittest because crypto winter takes out the weakest companies. Cash-rich miners are buying smaller operations that are about to close. For example, the mining giant, CleanSpark, has been busy buying into a competition for the past few months. The company has already made nearly $100 million to purchase mining facilities in Georgia from Mawson and Waha Technologies. It also purchased 10,000 Bitmain Antminer S19j Pro platforms at a reduced price.

This gives them access to more mining hardware and can increase profitability when the price of BTC rises and mining returns to its peak. It’s a gamble, of course, but it can pay a lot if all goes as planned.

Another way to get around low profitability is to bet on it. This is exactly what crypto services company, Luxor, helps miners do. On October 10, the company launched a new product for investors to take profits using bitcoin mining derivatives.

The product is called Luxor Hashprice NDF and works like any other derivative product used in traditional finance (TradFi). However, instead of betting on the price of a stock or cryptocurrency to protect against a market slowdown, Luxor Hashprice NDF will allow users to hedge against the bitcoin mining revenue one can earn over a specified period.

“If the profitability of bitcoin mining drops during this time frame, then you hedge that downside and make a profit,” said Colin Harper, head of research at Luxor. “But if profitability goes up, you lose money,” he went on to say while speaking to Decrypt.

What do retail miners do?

Wondering what retail miners or individuals can now do to mine another day? The obvious choices were to get a day job, trade bitcoin and other cryptocurrencies, and assemble their hardware equipment into high-performance computing pools.

Another trend emerging recently is to optimize as much as possible to spend less to mine more bitcoin. Whether it’s identifying times when network difficulty is at its lowest or looking for renewable energy sources to power their machines, retail bitcoin miners are doing their best to stay afloat.

conclusion

Grid difficulty touches new heights every two weeks, the cost of new devices increases with inflation, and the price of electricity is no longer the same as before. Despite all this, there is hope.

So what if the stock prices of many of the listed mining giants are half what they were six months ago? If there’s one thing we know about cryptocurrencies, it’s that prices go up as fast as they go down. The hubs made by these mining companies are not permanent. Mining will return once it becomes profitable again.

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