Here’s how cryptocurrency miners are surviving the bears

The most obvious way to survive a market crash is to avoid that crash. Simple. But there is much more than just avoiding a market crash inside of crypto markets: the unpredictability of prices may freak you and make you jump out at one moment but then in again the next moment.

Many who are already in it and finding the market difficult are trying out hedging or maybe stablecoins or may be opting to avoid selling at this time by going for alternative crypto products that suit those who need cash.

Crypto prices haven't been so good for many for the better part of this year and Chinese miners are short selling to survive the bears according to 8BTC, a Chinese crypto outlet. The outlet said last week that continued short selling among the miners was making them the biggest short sellers of Bitcoin (BTC) during the decline in prices in the last month.

The hedging option, which is available on many crypto exchanges today, allows a holder to lock their yields ahead of time to avoid market risks. A short seller can place an order on an exchange to sell crypto at the current price but deliver them at a later date if he or she perceives that the price will go down further. Therefore, when the price falls, they are able to make a gain on delivery, which will be the difference between the current price and the price at delivery.

While mining proved to be profitable for many miners during the bull run, delivering hundreds percentage in profit gains, the drop in price in the recent months has made mining not so pleasant with many people opting to disconnect their GPUs and even sell them, especially older models such as Antminer S7, Antminer T9, and Avalon A741. For instance, 8BTC quoted a Chinese mining equipment operator Jin Xin as saying that the “holding law” that is commonly applied on old miners is not working in the current bear market. For instance, during the bear markets in the previous years 2014 and early 2015, miners have been holding their mined coins to sell them and make amazing returns in the subsequent bull markets in 2017.

He started mining in October 2017 and using GPU miners he made a lot of money in just two months, much more than he had made from other businesses in three years combined. He told 8BTC that he would hedge against prices if the prices fell by another 10 percent. He is, however buying old GPUs at a low price from other people who are currently exiting the market in order to boost his hash power. He would, however, consider switching them off, dismantle and sell chips to gamers if the bear market continues. If the bulls kick in later, then he would sell GPUs at a profit to other people interested in mining.

Now is not a hard time just for individual and group crypto miners only, because companies in the business of manufacturing these chips are also experiencing low markets. Nvidia reportedly missed its revenue derived from personal computer makers by almost 40 percent because of lower demand for GPU products targeted for use in cryptocurrency mining. The company has however denied the news that the decrease in revenue was caused by a decline in mining equipment demand.

But hope is not lost for miners during bear markets. Even as Intel filed a new patent for an “energy-efficient high-performance Bitcoin mining” device and process that uses “hardware accelerator implementing SHA-256 hash using optimized data paths” and reduces energy for BTC mining by up to 15 percent. Old mining equipment can cut into owner's profitability by way of low efficiency and higher power consumption.

Survey miners, in addition to mining cryptocurrencies that are likely to deliver profits at this time, are also finding ways to cut down their power consumption further using more advanced equipment. This has coincided with the latest rush by manufacturers to release more advanced equipment. For instance, Bitmain last month released 2 new 7-nanometer Antiminer crypto machines that use a SHA256 algorithm, which is based on 7nm Finfet semiconductor manufacturing technology. They are Antminer S15 and T15.

Reportedly, the machines can achieve a ratio of energy consumption to the mining capacity that is as low as 42J/T. Not to fail to mention that other options such as staking and masternodes are increasingly becoming popular today as are other investment alternatives, for those seeking alternative passive income with their coins.

That said, the mining equipment market is still expected to grow at a CAGR of over 15 percent during the period 2018 to 2025 according to Market Research Vision's Cryptocurrency Mining Equipment Market report released last week.

Research Nester puts that forecast to 17.5 percent for the period 2018-2027, driven by increasing investment by large semiconductor companies in such equipment even as cloud mining services and remote hosting services became more popular in the developed regions. Other factors to propel that demand include rising usage of cryptocurrencies by retailers and rising difficulty levels of alternative i.e. altcoin mining, although volatility is expected to continue limiting the growth.

David Kariuki

David Kariuki likes to regard himself as a freelance tech journalist who has written and writes widely about a variety of tech issues that affect our society daily, including cryptocurrencies (see cryptomorrow.com and coinpedia.org); climate change (cleanleap.com), OpenSim and virtual reality (see hypergridbusiness.com). He is currently pursuing a MSc in Environmental Management at Open University. He does write here not to offer any investment advise but with the intention of informing audience, and articles in here are of his own opinion. Anyone willing to use any opinion here as advise to invest in crypto should obviously take own responsibility and accountability of their losses (or benefits) thereof. You can reach me at eqariu@gmail.com or david@cryptomorrow.com

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