Owing to the decline in the prices of various crypto coins, the crypto mining activity skyrockets.
Crypto industry represents a highly complex area when it comes to getting into the depths of its functioning. There are things which contradict each other, making it difficult for a layman to process.
If the prices of the digital coins in the crypto market are at a constant fall, it does not necessarily mean that the hash rate is declining too. Hash rate, in normal terms, can be explained to be the speed at which a computer completes an operation in the Bitcoin code. While mining, a higher hash rate is preferred as it increases the opportunity to find the next block and receive the reward.
Therefore, keeping in view the current hash rate, which is at a hike, it can be inferred that Bitcoin mining is still profitable, regardless of the constant fall in its market worth.
It was during the end of 2017, when the Bitcoin prices were skyrocketing, that the efficient Bitcoin miners took undue advantage of the situation, establishing their mining farms in places with cheap power and snatching up increasingly speedy chips. Owing to the successfully grabbed opportunity back then, today, when the markets are bearish, they stand in a position to overthrow the smaller players and smoothly dig their way out.
In this context, the chief executive officer at Genesis Mining, Marco Streng, has mentioned in one of his statements that,
“There are still major expansions happening, especially from more efficient miners. The expansion is so big that it compensated for the drop-out of not-so-efficient miners.”
If we were to put to analysis, the change in price rallies coinciding with the gains in the hash rate, the relationship between the two would not be without deviations. In theory, a climbing hash rate should pull the price higher because it implies the cost of each token being higher. But as opposed to the past the computing power may be rising now because of yesteryear’s growth in capacity which reflects dipping costs to miners and imply higher prices. Additionally, there arises a possibility that crypto miners will be willing to mortgage their holdings as the profit margins shrink.
The climb in the hash rates indicates that people are here for a longer tenure. As in accordance with the acclamations made by David Sapper, the Chief Operating Officer at Cryptocurrency Exchange Blockbid Pvt. Ltd. in Melbourne, “they do sometimes have to clear the house and dump.”