One of the biggest victims of this year’s bear market has been the miners. The pain has been fairly evenly distributed between the large-scale enterprises, which invested significant capital to mine against falling profitability and the small-scale amateur miners, who were priced out of the market.
While some view this as a major issue within the cryptocurrency community, Arianna Simpson, the managing director at Autonomous Partners, believes its a feature of Bitcoin’s programming.
In a recent tweet, Simpson put it simply, “The fact that miners are shutting down and difficulty is decreasing is a feature, not a bug, of bitcoin’s design.”
The fact that miners are shutting down and difficulty is decreasing is a feature, not a bug, of bitcoin’s design.
— Arianna Simpson (@AriannaSimpson) December 1, 2018
While Bitcoin’s global hash rate has increased steadily throughout the year, the latest drop in price, which saw Bitcoin (BTC) hit as low as $3,600, has led to many mining operations to shut down. As a result, the global hash rate has dropped from 60 million TH/s on October 14 to 33.4 million TH/S on November 29, an almost 50% decline.
Following this trend, there will eventually be a balance between the revenue generated and the operational costs of mining. This ultimately depends on numerous factors, including the price of Bitcoin, and if the global hash rate falls too low, expect miners to jump back into the market to drive it back up.
BTC is currently down 3% on the day to $4,153, giving the largest cryptocurrency a $72.3 billion market cap and making it roughly 53.7% of the $134.5 billion cryptocurrency market.
More: Arianna Simpson’s Tweet
Disclaimer: This article’s author has cryptocurrency holdings that can be tracked here. This article is for informational purposes only and should not be taken as investment advice. Always conduct your own due diligence before making investments.