Smaller companies’ recent investments in cryptocurrency mining devices could be a positive sign of the longevity and value of Bitcoin (BTC). At the end of June, the US-based blockchain company Core Scientific was founded He ordered more than 17,000 of the latest Bitcoin mining ASIC machines from Chinese hardware manufacturer Bitmain. The news caused a sensation in the industry as the largest known order for Antminer S19 was carried out by a single operator.
Core Scientific will use some of the machines for its own operations, while the rest will be used for its cloud-based mining services for customers. Also, One of its key customers, Horizon Kinetics, has increased its investment in Core Scientific to gain access to Bitmain’s new mining equipment.
This news is the latest in a series of investments and developments in large mining operations outside of China, which has been the center of Bitcoin’s global mining ecosystem for more than half a decade. Large investments by smaller companies that want to improve their presence in mining not only create a positive mood in the industry, but also a positive mood in the industry They also show that smaller companies are actively trying to get involved in an area dominated by larger companies.
Halving means efficiency
Investments by smaller industry players in crypto-mining devices indicate increasing trust in the sector. Despite the fact that Bitcoin’s mining premium has halved recently, traders seem to be playing the long game, indicating an optimistic outlook for the industry.
Cointelegraph spoke to Jason Deane, an analyst at Quantum Economics, a financial advisory and analysis firm with practical experience in the mining industry. According to Deane, Core Scientific’s investment in miners shows optimism in this sector. “”You clearly feel it or would not“He said. In addition, Deane believes that the equation is fairly simple when you look at the numbers:
“Mining is a business that is absolute in key numbers. So it’s just about continuously evaluating profitability. While difficulty and hash are variable and closely related, we can assume that both will increase with time. If the price for bitcoin is rising significantly, we can also be pretty sure that it will rise much faster, it all depends on the cost and protection position – if you can secure the energy that will ensure that your breakeven point is very low, say US $ 6,000 -Dollars or less for Bitcoin, so you have good insurance against the next steps. “
It is also important to consider the price of the latest mining equipment to understand the ramifications of large investments in a large company. A new Antminer S19 costs $ 1,785 on the Bitmain website. If Core Scientific bought its miners at that price, it would be about $ 30 million for 17,000 units alone.
However, Deane is not surprised at the value of investing in the new mining equipment, even after the last cut in half, and suggested that some miners could work profitably until the next cut in 2024: “The future mood is broadly optimistic and no further adjustments will be made for four years“The addition”Current devices bought so early in this halving cycle have a good chance of a good return on investment and may even be valid for the entire period“”
Johnson Xu, Chief Research Officer and Chief Analyst at TokenInsight, told Cointelegraph that several companies with access to capital had prepared to invest in mining equipment before halving. The move was fueled by the opportunity to increase operational efficiency by replacing old devices with new machines:
“I think the Antminer S19 deliveries that occur immediately after halving are another factor contributing to the recent massive investments in mining equipment. The S19 is one of the latest SHA-256 mining ASICs on the Market that many buyers are willing to buy state-of-the-art machines to improve their current operations or just open a new mining operation. “
In a previously published statement from Cointelegraph, Xu investigated the decline in bitcoin’s hash rate after halving and suggested that this could have a positive impact on the ecosystem. He supported these feelings in his latest correspondence, highlighting the great opportunity for miners who have not yet updated their hardware, adding: “For those miners who can’t cut their electricity bills, upgrading to the most efficient miners is the best strategy for long-term profitability“”
Simon Peters, an eToro market analyst, also commented on the recent surge in mining hardware investment in the shadow of Bitcoin halving in May. Peters believes that the current market situation continues to encourage operators to be efficient and plan ahead::
“There is an even greater incentive for miners to become more efficient. Miners need to find ways to lower overhead costs and remain profitable, even if that means investing more capital now to be more efficient in the future.”
Big investments are a boon to Bitcoin’s longevity
The road to the last halving of the Bitcoin reward was riddled with extensive predictions about the impact on the price of the outstanding cryptocurrency and its impact on the mining ecosystem.
In the days after halving, there was an immediate impact on Bitcoin’s mining difficulties, but the general mood was The event had no overly negative impact on the Bitcoin ecosystem. Any major investment in a particular industry or company is intended to create a positive mood for the future, and Deane believes that this represents a change in sentiment towards Bitcoin:
“I would consider it a positive affirmation of the industry as a whole and proof of Bitcoin’s belief in longevity itself. We are leaving the days when Bitcoin was experimental or just for geeks and we are entering a new it was professionalism and application. It makes perfect sense that this level of investment takes place now. “
According to Xu, this sentiment is reflected in the strong inflow of capital into the mining sector due to the perception that bitcoin mining is an important part of the cryptocurrency ecosystem: “Although the mining ecosystem can still be considered opaque and there is insufficient data and information, many industry players have worked together to bring transparency to the sector“”
Peters also argued that these recent events could also strengthen Bitcoin’s mining ecosystem by becoming more efficient than “Only the strongest and most efficient mining companies will survive“but it also offered a possible disadvantage in this regard:”On the other hand, there is now a greater fear of centralizing the hash and that a large part of the network hash is controlled by just a few mining pools.“”
Peters produced another interesting by-product of investments by smaller mining companies: the mining of energy that is moving away from China. The country has long been the geographic home of the miners who were responsible for much of the bitcoin hash rate. Peters gave three possible reasons for this:
“A greater appetite for venture capitalists in these countries to invest in cryptocurrencies; more favorable conditions for operating a mining operation in terms of both the colder climate and access to renewable energies; and finally, existing mining operations in China that are expanding into other countries, to cover his risks. “