Analysis Expert Blog

Whales Enter Mining: What Does It Mean?

Cryptmarket paradoxes: the Corn is hovering around $ 4K, Ether is trying to grow before the hardfork and shares second place as for capitalization with Ripple (XRP). And at this time, large companies are purchasing equipment for mining! What does this mean in terms of the market?

Flat as energy buildup

The market has been flat for more than a month.

Bursts of optimism are quickly extinguished by the negative both by the Corn and Ether. From time to time stablecoins go up or Ripple grows in pair with Stellar. Muddle instead of music – and only! In this chaos, destructive processes occur predominantly. The market seems to be shrinking more and more. The least patient investors withdraw their bitcoins. Experts say it’s good! “Tourists” are leaving, there remain those who entered crypto not by chance and not for one day.

The same processes occur in mining. According to numerous reports, Chinese miners cease operations and simply throw equipment away. But in China, according to various sources, from 70% to 80% of mining is concentrated.

Can we say that these processes are for the benefit of the market? A year ago, on the wave of rapid growth of the cryptomarket, users were interested in purchasing mining farms up to 100 K times per month. These were mostly singles, private investors. Now the interest has gone down, and for objective reasons. Among them – not only a sharp decrease in capitalization and cryptocurrency prices. Among other reasons – the increasing difficulty of mining (see Diagram).

This principle underlies the existence of cryptocurrencies and protects them from depreciation. The meaning of mining is to receive rewards for mined blocks. Achieving the block rewards is the only legit way to create new Bitcoins. And this reward is gradually reduced. Initially it was $ 50 per block. In 2012 it was reduced to $ 25. In mid-2016, it fell to $ 12.5. The next decrease by 2 times will be in 2020. The Bitcoin price reduction is superimposed on it – for 2018 it was 77%. And the cost of electricity is different in different countries.

Paradoxes of immersion mining

Now it is clear that only those who use the most efficient equipment will survive in mining. Initially, even home computers had enough power for mining, then GPU went into action. On the wave of increased demand, the main manufacturers AMD and NVIDIA did not even keep up with the market; the price then increased 1.5 times. But GPU mining is no longer relevant, compared to ASIC mining, which is 100-10000% more efficient. Further, the search for efficiency went along the path of heat removal. The most advanced solution turned out to be immersion cooling – cooling with the help of a special dielectric fluid. Large format miners have opted for just such equipment. This is confirmed by large orders that are received by manufacturers of immersion mining equipment. The Beeminer Group company reports that it got the largest orders in its history! Founder and CTO Beeminer Group Evgeny Belov notes:

– As soon the Corn occurred collapsed to $ 5 K, then to $ 4 K or even lower – the very next day we received the largest order for the entire existence of our company Beeminer. Two days later another customer arrived, and this record was broken – he ordered even more units. What is the reason for this? I do not give answers. I simply state this fact as pleasant for us. We started to work in two shifts in order to fulfill these large orders.

Thought-provoking information

Installations of immersion mining, although the most effective devices, still require tangible investments. Obviously, large investors have calculated the prospects and have grounds to believe that we have reached the bottom. Now the slightest upward movement will already be profitable. Especially if you invest in mining now, when the cost of the block has not yet dropped to $ 6.25. Until mid-2020, you can get a profit that is significantly higher than that stated by observers – $ 600 at ASIC per year. At the time of the fall of Bitcoin and other cryptocurrencies, Beeminer received the largest orders for immersion mining installations. Owners of large mining farms are deployed on the market, which means that not only we expect the rate of the Corn and Ether to grow in 2019. Let it not deceive the market flat. Every experienced sailor will tell you: “Such a dead calm foretells a strong storm!”