Consolidation in Cryptocurrency Mining Industry to Pressure the Price of Bitcoin.

Bitcoin mining is increasingly becoming an activity for big business as the complex calculations needed to generate the virtual currency require industrial-scale capabilities. As the mining industry matures, the expected consolidation is likely to oust ‘regular folks’ that use their personal computers.

Great cryptocurrency miners are taking over the game. Bill Tai, the chairman of Hut 8 Mining Corp., the North American arm for crypto-mining equipment provider Bitfury Group Ltd., expects only five to 10 of the largest miners to survive and be profitable.

In this regard, Bill Tai told Bloomberg “It’s totally different this year than last year. 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.”

Lucas Nuzzi, a senior analyst at Digital Asset Research, says that selling bitcoins to cover operating expenses can depress the price of digital currency, taking into account that miners have between 20 and 30 percent of all bitcoins. The concentration of the mining power could launch the market into a new era, where a few actors would have enough control to dictate the development of the blockchain ecosystem.

Therefore, Lucas Nuzzi commented, “It has the potential of being dangerous from a security standpoint since a single entity could use its power in terms of hashrate to disrupt the network.”

The smaller miners buy their chips and machines from the manufacturers, while the miners on an industrial scale design and manufacture their own hardware. Economies of scale allow them to place bulk orders, buy electricity at a discount and be profitable even with Bitcoin at $ 8,000.

Likewise, Tai added, “We can buy and source orders of magnitude more. We can buy silicon in large quantities and commit to the electricity grid in chunk sizes. We have the cash to make the deposits and set them up”.

Smaller buyers are also facing a shortage of PC components to enhance their mining ‘rigs’. Increased demand, especially since 2017, wasn’t met with a proportionate response from manufacturers, which led to prices skyrocketing. It is already prohibitive for a small-scale investor, it is not sustainable at home, the investment recovers in a long time, apart from the problems of noise and excessive energy consumption, it does it uphill.

The concentration of mining power in the hands of a small number of corporate entities is frowned upon by most people within the ecosystem as it contradicts the very nature of a decentralized network that does not need to rely on users trusting large corporations. The so-called 51% attack, a monopoly/oligopoly of the network’s hash rate with the power to effectively steal money from other users, remains a distant ‘worst case scenario’, but not as distant as before.

Therefore, in some cases specialists claim that true decentralization does not exist, the big miners can seize the power of hashrate, which would lead to mistrust on the part of users and to the detriment of the value of cryptocurrencies and especially of bitcoin It waits for new ads.

Reference: newsbtc.com

Disclaimer: This press release is for informational purposes information does not constitute investment advice or an offer to invest. The views expressed in this article are those of the author and do not necessarily represent the views of infocoin, and should not be attributed to, Infocoin.

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