The ongoing price warping in the global cryptocurrency industry is caused in part by crackdown on bitcoin mining and all other cryptocurrency activities from China.
The reduction in miner engagement has not only stopped the flow of computing power into the Bitcoin network, resulting in a massive drop in the mining hashrate; it has made mining significantly more profitable for existing and ongoing miners.
Crypto miners are selling their hardware while some are moving to new safe havens, particularly the US and Kazakhstan. One problem persists, as reported by Bloomberg, and that is the unavailability of data centers to house the numerous mining machines leaving China. This has created a situation where miners are willing to pay above the normal premium to secure a place in data centers.
“People are paying an arm and a leg to find hosts,” said Christian Kaczmarczyk, director of the venture capital company Third Prime. “These miners from China are willing to pay 6, 7, 8, 9 cents to get into the game. You pay whatever. “
The mining problem has shifted from a lack of supply of machines to a lack of enough data centers to house these machines. The compensation caused and the resulting drop in hashrate imply that for the same amount of work done up to three times up to this point in the last year, the reward can be obtained, but only for miners in regions whose activities are not have been affected by regulations.
According to the Bloomberg report, efforts to build new data centers could stall as there are no readily available materials to quickly track the facilities.
“Machines are no longer the bottleneck,” said Meltem Demirors, chief strategy officer at CoinShares. “Hosting facilities are. You just can’t build a huge co-location data center in a few months. “
With companies like Argo Blockchain securing a $ 20 million loan to build a new facility while other similar gestures have been made by other companies, the likelihood of fixing the shortage of space in the short term is low.
Image source: Shutterstock