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Bitcoin mining in freefall

Photo of: Joseph Stone
by Joseph Stone

It’s a crisis for BTC mining equipment manufacturers. The Bitmain manufacturer is suspending sales of its machines, whose prices are collapsing.

The ban on Bitcoin mining in China is having a serious impact. The effects are being felt beyond just the price of BTC, which is under severe pressure. During the week, the price of Bitcoin fell back below $30,000.

But it is also an entire industry that suffers from the decision of the Chinese authorities. The miners, numerous in the country, are forced to put an end to their activities. The result is a sharp decline in the hash rate on the blockchain.

However, the miners’ daily lives also affect another link in the crypto chain: the manufacturers of mining equipment. Bitmain, one of the world’s leading manufacturers, is making a radical decision.

The company, reports Bloomberg, is suspending sales of Bitcoin mining machines. A direct consequence of the Chinese policy. Bitmain already announced a day earlier a pause in the marketing of new equipment.

The reason? A sharp drop in sales prices of 75%. And the reasons for such a plunge are actually quite simple. The banning of Bitcoin in China and mining is the final straw for many miners.

These miners are selling their machines on the second-hand market, causing the prices of these devices to plummet. The impact on Bitmain sales is immediate. China would represent between 65 and 75% of BTC mining in the world.

Manufacturers will therefore have to find new outlets for their products. This is already the case for the Chinese manufacturer Canaan. The latter is indeed setting up in Kazakhstan, a country that is trying to develop a mining industry to generate new revenues.

But if the equipment manufacturers are going through a complicated period, it should only be temporary. The mining market needs to reorganize and relocate its activities to new countries.

A boss of a mining pool in Hong Kong explains to CNBC to diversify its hashrate by relocating to the United States and Canada. “The good thing about bitcoin, which is underestimated by many opponents, is that it’s a portable market; you can take it directly to the source of power,” confides another executive.

North America should therefore benefit from this forced exodus of Chinese miners. As for manufacturers, they have been recording record orders from North American miners listed on the stock exchange since the end of 2020. This will allow them to wait for a return to normal.