The whole cryptocurrency market saw the brighter side as all the currencies took the direction up north. This comes across as a significant move made by all the currencies as the investors were at the verge of giving up on the market. Additionally, last year this time, all currencies were on their way to hit their all-time high. This year, however, the market was concerned about Bitcoin entering a death spiral.
Jimmy Song, a Bitcoin Core developer, discussed the mining cost over-riding the price of Bitcoin on the latest episode of Bitcoin brief. He also spoke about Bitmain’s position because of the mining cost and their investment in Bitcoin Cash.
Song stated that the mining cost always increases during the bear market. He added that as the price decreases, it is more uneconomical for the marginal players. However, according to him, there are smarter players who can mine for cheaper prices. He said:
“This is exactly what happened in 2014-2015, there were tons of mining manufacturers there were a lot of pools that more or less disappeared, you know, there used to be like cloud hashing contracts and things like that. None of those really are around anymore because they were really economically inefficient”
He went on to say that anybody can earn money in the bull season because the market is “enormously profitable”. However, during the bear market, miners have to be a lot more economical in terms of where they get their electricity, mining equipment and how they source everything.
“You can’t just pay everybody, like giant salaries and things like that and you know this is not only happening in mining, but in a lot of other places as well and that’s a very good thing because, you know, the the strong survive and you want the strong companies to survive. Now you know all these like fluffy ones that can only make money when everything is perfect.”
Furthermore, he stated that Bitmain was one among the strong companies in 2014 and 2015, adding that it would be “interesting to see” if they are still one among them.
“……Because I suspect they’re not anymore. They’ve grown too gigantic, they probably made too much money, have made a few too many acquisitions and of course they invested way too much in Bitcoin cash and have basically drunkenly gambled away a lot of their profits. so we’ll see how that plays out but that’s that’s my take on the current situation with mining.”
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