Could Bitcoin Mining Industry Collapse Under The Current Environment?
Bitcoin (BTC) miners are faced with the problem of both capital and mining costs, where the issue is money to be spent on unexpected equipment repairs. The enforcement of regulations varies from country to country.
In the United States, it’s even more heartbreaking because from state to state there are different laws that apply. With all these factors miners have to bear the pressure and the heaviest thing they have to face is the price of cryptocurrency miners. Bitcoin, which previously hit $69,000, has fallen to $23,800.
While Bitcoin has dropped more than 65% from its all-time high, what is commonly known among miners is to keep calm and keep steadfast in the sats (the sub-unit of BTC), and wait until the market starts to recover again.
Luxor CEO Nick Hansen said during Cointelegraph’s Bitcoin miners panel:
“There’s going to definitely be a capital crunch in publicly listed companies or at least not even just publicly listed companies. There’s probably close to $4 billion worth of new ASICs that need to be paid for as they come out, and that capital is no longer available.
Hedge funds blow up very quickly. I think miners are going to take 3 to 6 months to blow up. So we’ll see who’s got good operations and who’s able to survive this low margin environment.”
When asked about the challenges and future expectations for the Bitcoin mining industry, Magdalena Gronowska, a consultant at PRTI Inc, said:
“One of the biggest challenges that we’ve had in this transition to a low-carbon economy and reducing GHG emissions has been an underinvestment in technology and infrastructure by the public and private sectors. What I think is really amazing about Bitcoin mining is that it’s really presenting a completely novel way to fund or subsidize that development of energy or waste management infrastructure. And that’s a way that’s beyond those traditional taxpayer or electricity ratepayer pathways because this way is based on a purely elegant system of economic incentives.”
Is Bitcoin Destroying the Environment?
Through the panel, there was talk of how BTC mining affects the environment and the assumption that Bitcoin’s energy consumption is a threat to the world. Blockware Solutions analyst Joe Burnett commented:
“I think Bitcoin mining is not bad for the environment. I think if that would affect anything, it would encourage more energy production. It will improve the reliability and flexibility of the grid. I think it should help reduce the cost of electricity sold directly to consumers in the long run.”
According to Burnett, “Bitcoin mining is a bounty to produce cheap energy, and this is good for all of humanity.”
What Could “Mass Adoption” of Crypto Mean For Bitcoin Mining Industry?
Hashworks CEO Todd Esse discussed the future expansion of the Bitcoin mining industry and whether the industry’s growth will ultimately lead to wider adoption of crypto.
Esse said:
“I think the Bitcoin mining industry will be mainly in the East, North America and some parts of Asia. It depends on how long they can last and that is indicative of the availability of natural resources and energy costs.”
Although it is easy to assume that the increased synergies between large energy companies and Bitcoin mining companies will increase the legitimacy of BTC as an investment asset, Hansen disagreed, saying:
“No, certainly not, but it is going to be the thing that transforms everyone’s life whether they know it or not. By being that buyer of last resort and buyer of first resort for energy. It’s going to transform energy, energy markets and the way it is produced and consumed here in the US. And overall, it should significantly improve the human condition over time.”
