600K to 800K Bitcoin Miners Became Useless?

Bitcoin is currently below $4,000, while Bitcoin mining breakeven level is at $6,000. Unfortunately, things went south over the last few days. It started because of the Bitcoin Cash hard fork. Bitcoin was stable at around $6,200 to $6,500 until the Bitcoin Cash hard fork that dropped Bitcoin’s value along with other altcoins. The worst day for Bitcoin happened when it slipped below $3,500. This is the lowest level for Bitcoin since September 2017.

It has been reported that there were mining rigs that are no longer profitable. In fact, some of these mining rigs were sold as scrap metal. According to reports, there are around 600,000 to 800,000 Bitcoin miners that were shut down since mid-November.

In an interview with Mao Shixing who is the founder of F2pool, he said that the company took into account the drop in the network’s hash rate as well as the hash power of the older mining machines that are now having a hard time to generate profits. It has been recorded that the hash rate decreased from 47 million tera hashes per second on November 10 to 41 million tera hashes per second on November 24. That is equivalent to a 13 percent decline in the hash rate of Bitcoin.

Why is Hash Rate Important?

Basically, the hash rate will dictate the willingness of the market to spend on operational expenses in order to mine Bitcoin. But as the price goes down and investors most likely have initiated “stop loss” when the price reached below $4k.

If you notice, Tom Lee also predicted in the past that Bitcoin is about to reach $25K by the end of the year. But after this week’s drop, he then changed his prediction to $15K, again it is based on the current Bitcoin hash rate.

Older models such as ANtminer T9+ and AvalonMiner 741 have already stopped operations and some are even for sale for a great price. These machines have an estimated average hash power of 10 TH/s and are both losing money. Mao mentioned that “It’s hard to calculate a precise number of miners connected to us that had unplugged. But we saw over tens of thousands of them (shut down) in the past several days based on conversations we had with larger farms that we are in regular contact with”. He also added that “This is what’s happening among miners in China”.

It was reported in the past that 70% of Bitcoin’s hash rate has been found in China. In the past, large-scale mining operations remained profitable while small-scale miners can’t keep up with it anymore. But now, it seems that even large-scale miners are dealing with the harsh realities of a bearish market.

Mao mentioned via Weibo that “Shutting down is not an option, now have to sell by the kilos” as he described miners selling their mining rig as scrap metal. He said that “Those miners being sold by the kils are even older and obsolete models that aren’t usable anymore. So people are selling to recycle (them) like copper instead of further mining purposes”. Could this trend be just a short-term thing? Can Bitcoin recover in the coming months?