Mining Decline: Cryptocurrency market crash hurts China’s miners
Cryptocurrency miners in China are going through a tumultuous period and are selling their mining equipment by the kilo, according to a report by local crypto news outlet 8BTC on Wednesday.
The cryptocurrency market has been going through a bearish onslaught in the last two weeks. The collective market value has fallen from a high of $220 billion at the start of the month to under $140 billion on Friday. Bitcoin, which accounts for over 53% of the collective market cap, has slipped below major support levels and is now trading under $4,300.
Cryptocurrency mining requires a large amount of electricity and since China can produce cheap electricity, the world’s cryptocurrency miners are concentrated in the Asian country. However, owing to low mining returns amid the market crash, several miners have been forced to shut up shop. Older models such as Antminer S7, T9 and Avalon A741 have reportedly reached their “shutdown price” and are being sold in droves.
When the market had crashed early in September, which led to BTC drop from $7,300 to under $6,400 in a day, F2Pool CEO Mao Shixing published an infographic showing that if Bitcoin were to fall to under $5,300 (36,779 yuan), the Antminer T9 would be unprofitable. The aforementioned S7 model miner would just about breakeven if Bitcoin would rise up to $11,500 (79,805 yuan).
Lower scale miners in Xinjang and the inner Mongolia regions of the country are selling their machines in second-hand markets, which value the equipment at one-twentieth the cost compared to the same time last year.
The plummeting prices coupled with a current-dry season in Sichuan – a hotbed for miners in southwestern China – have further debilitated the conditions for mining cryptos.
Miners have been selling their equipment by the kilo to avail quick cash. Earlier in the week, “Miners sold by kilo” had been trending on Baidu search, the Chinese version of Google.