Despite a global drop in prices making it a less appealing economic proposition, cryptocurrency mining continues to consume increasing amounts of computer power.
Miners of cryptocurrency such as bitcoin and Ethereum are rewarded with cryptocurrency that fluctuates in value when compared to traditional currencies, so while mining costs are predictable, income varies. Bitcoin was worth more than £50,000 on November 8, last year, but it was worth less than half that on May 15, this year, at £24,244. During the same time period, Ethereum fell from £3567 to £1647.
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Miners appear to be resilient despite these setbacks. They get cryptocurrency by performing intensive computing operations. The total hash rate of the bitcoin network, a metric that tracks the amount of computer power devoted to mining, is at an all-time high.
According to the most recent Cambridge Center for Alternative Finance (CCAF) data, it reached 248 exahashes per second in February and has since continued to rise. Ethereum’s miners have also demonstrated tenacity in the face of price declines. On 15 May, the Ethereum hash rate was 1103 terahashes per second, up from 613 terahashes the previous year, according to Y Charts data.
Along with recent price drops, the cryptocurrency sector is still dealing with the fallout from China’s ban on cryptocurrency mining, which went into effect in May. According to the CCAF, the ban has worsened, rather than improved, cryptocurrency’s environmental footprint because miners have sought cheaper, but not necessarily greener, energy elsewhere.
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An artist who uses cryptocurrencies in his work and has previously published research on the energy consumption of Ethereum claims that a decrease in coin price should result in a decrease in mining, but that this can happen over longer timescales. He also stated that, despite the price drop, no unusual dip in hash rate can be seen right now.
Bitcoin is currently on a slight downward trend, but this is within the normal range. In another week, it will be interesting to see if miners are consistently turning off some of their rigs, indicating that they are operating on thin profit margins.
The crypto is a rapidly flourishing market but the dynamics are changing due to several factors. Let’s see what the future brings. Stay tuned to find out more.