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The Survival of the Fittest: BTC Miner Story

4 months ago

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Who would have guessed that a phrase from the 19th century is the best description of the world in the 21st century?

Herbert Spencer

 

“The Survival of the Fittest”, the phrase first used by Herbert Spencer in his Principles of Biology in 1864, may be the best depiction to describe the current situation of the Bitcoin miners.

Whether you are interested in Bitcoin or not, you must have heard from the media about the recent “Bitcoin Halving” that took place on the 12th of May when the 630,000th block was mined.

Just in case you are really new to the world of cryptocurrency, let us briefly take a look at the “Bitcoin Halving”.

What is the “Bitcoin Halving”?

Source: Shutterstock.com

Bitcoin, the world’s most popular cryptocurrency, has been and still is the most trendy keyword recently. In the last month, Google Trend showed a chart with the skyrocketed graph for searching the keyword “Bitcoin Halving” from Google.

The halving was first designed to effectively maintain the value of Bitcoin by mechanically dropping the supply, which is in contrast to the 'quantitative easing' used by many central banks to increase liquidity through the purchase of government bonds. The first and the second halving worked beautifully and brought the price from $15 in 2012 to approximately $20,000 in 2017. Nevertheless, people are expecting a different outcome for the upcoming halving by studying recent patterns of other cryptocurrencies’ halvings.

Now that we all know what the “Bitcoin halving” is, why “the Survival of the Fittest”?

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Shortly after the third halving, according to the date shown on Blockchain.com, the hash rate (the Bitcoin mining power in simple terms) has dropped significantly.

Source: Blockchain.com

This rapid drop indicates that the ‘inefficient’ miners who cannot sustain their businesses under the new return of 6.25 BTC were forced to shut down their mining machines. Those with legacy machines like Antminer S9 are already losing money. According to a calculator provided by Poolin, operating S9s at $13,760 is still making a loss. This proves that the halving had a ‘real impact’ on the Bitcoin mining industry.

Nevertheless, the ‘fittest’ will prevail. The miners with higher efficiency will survive and continue their works to mine more Bitcoin blocks since the price of Bitcoin is expected to rise and even if the return of BTC is halved, its converted value may become higher. Historically, after the occurrence of each capitulation, there had been price surges afterward. We do not know how long it will take until the peak though.

So, All We Have To Do Is Wait For The Price To Go Up?

Source: Photo by Austin Distel on Unsplash

The answer is “No”. As mentioned before, no one can tell the time till the next peak. The increase in the price of Bitcoin could lead to another bull cryptocurrency market, but those miners who could not generate profits will sell their Bitcoins in the market causing price fluctuations along the way, and experts are anticipating some big fluctuations.

This is the time where people had to act wisely and diversify your investment strategies. For traditional spot traders, there is no way to profit when the price goes down. However, cryptocurrency derivatives exchanges such as MCS (MyCoinStory.com) shine in this volatile market since one can hedge by short selling to profit in any market condition.

Only those who can adapt to the changing environment can survive. That is the essence of “the Survival of the Fittest”. Let’s all survive through the price volatility and make some profit along the way.

 

   

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Published 4 months ago