Bitcoin

Crypto Miners Adding Fuel to Fire as Bitcoin Plummets Down

The cryptocurrencies, including bitcoin and the altcoins, are on the verge of facing the greatest falling curve for their monetary charts. The downfall of the financial giants though, can yield no significant benefit to the owners of the respective digital currency, reports show the increase in the hash rates as miners claw their share out.

How are the hash rates a direct measure of the crypto miners?

The blockchain technology is a network of nodes that represent an individual or a company dealing in the cryptocurrency. The dealers i.e. the customers or investors make transactions through the network and successfully stamp their matters, successful. The transaction requires a crypto miner to validate the information and eventually spread it throughout the blockchain, a meaningless piece of information to the nodes that makes the blockchain, decentralized.

The crypto miner is responsible for ensuring the authentic information for which he earns a small amount of capital. For the very purpose, the miner requires a special sort of hardware, a membership for the crypto platform and one for the mining pool. The mining trend has escalated so much that the competition has become a sturdy one. The miners compete in order to score themselves a decent amount of cash altogether. The hash rates come in as a measure of the computing power of the hardware the miners are using for the authentication process gaining incentives as they win from other similar miners. The winning criterion is based on how quickly a hardware system can crack a puzzle as a transaction proceeds, by which obviously the strongest of hardwares can win. Bitcoins or altcoins are created as the process continues earning the wining miner some tokens.

The Two-sided Assault on Bitcoin:

The crypto market is facing the immense devaluation as recorded from November of the previous year. The factors that tend to eventually result in the abrupt trend of the cryptocurrencies out of the blue, are worth worrying about. But what the icing on top is that the hash rates charts have been on quite a roll for some time. This displays the sheer interest in mining that is still on the rise even though the crypto market is plummeting down to the ground level, igniting the extinction forecast for the cryptocurrencies.

The miners have always been keen to earn some cash owing to their availability (24/7 internet connection) and the strength of their hardware as mining has always been fruitful for them. The tables for the crypto market have turned upside down as the brief rise that analysts witnessed, is not up to the mark and certainly was not expected to be so little. But the queer thing reveals as we see a rise in the hash rates hinting at more mining competition. The mining game is still profitable and worth the hassle is what we can judge by this recent shocker.

Bitcoin price/hash rates chart. source: Bloomberg

The bitcoin mining escalated with the price of the digital asset which was obvious as per the trend and the benefit of earning more tokens (as the token would grow in price). Last year, the price shot up to an amazing bound which initiated an immense interest in the cryptocurrency platforms. This tended to increase the mining trend in almost every crypto enthusiast as that would earn them token worth money (as that would go up).

The newbies were eager to claw out their fair share of capital whilst the greater sharks in the mining world turned to maximize their hardware power. The juggernauts of the mining world turned to resort for their ultimate chips that could process much great as compared to the amateur miners that had recently started roaming. Miners with great computing powers would crush (as they do now), whilst the defeated would lick their wounds to come back for the token hunt.

While the trend for the bitcoin price is a falling curve, the hash rates do not seem to mind one bit. The chief executive officer of Genesis Mining, Marco Streng is of the view that the mining trend still bears the power to lure in more people to get in the race for the tokens. He states,

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.

How is the capital restricted from accumulating among a few strong miners?

The mining game sure yields a lot of money (as tokens) among the pool of miners that seek to solve the crypto puzzles. The puzzles, calculations that form new digital coins, tend to get tougher as the the mining gets to the higher level. This creates equivalent chances for the newbies as well as creating an aura of anti-capitalism. The hunt for the mined tokens has been turned to such extremes that the technology juggernauts have assigned the crypto miners as the major clientele that pours in capital into the tech-giants, the likes of which include NVIDIA Corp and Taiwan Semi-conductor Manufacturing Co.

Do increased hash rates tend to take the price chart high?

The hash rates owe their existence to the ever-increasing computing power of the mining devices. The more the competition there is among the powerful miners, the more the price for the tokens is. But the recent trend has not followed the expected path as we see both the parameters in the opposite directions. That can consequently coax the miners to sell their major shares off as they would fear the mass extinction looming over the crypto world.

David Sapper, the chief executive officer at cryptocurrency exchange Blockbid Pty Ltd., Melbourne, thinks that the miners are here to stay even though we see rather unpleasant graphs for the crypto prices.

The increased hash rate means people are here for the long-term because they’re happy to just accumulate what they have, potentially even run at a loss. They do sometimes have to clear house and dump.

says David. This does portray the crypto world as a a recycling one that can wear off any speck that sticks to it. But the realistic and practical approach would be to think of it as do Christopher Bendiksen and Samuel Gibbons, researchers in profession, who state,

The efficiency of the hardware is rapidly increasing and costs are coming down. Miners are securing access to highly competitive sources of electricity, often ones that would otherwise lie idle, and show high degrees of mobility.

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Mohammad Shazil

A Riverside, CA born Electrical Engineer who bears the passion to write over every happening around. A crypto zealot. Shazil is the sub-editor of BlockPublisher news. Email: shazil@blockpublisher.com or contact the editor at editor.news@blockpublisher.com

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