Ethereum has been struggling with its price lately. In fact, it has dropped to $447.20 as of writing this article. In order to understand what made Ethereum drop from its last week’s peak of $590, it is imperative to take a closer look at a number of different factors.
Ban on Advertisement
First, it is important to take a closer look at the announcement made by Twitter, Facebook, and Google. After weeks of speculation when Twitter is going to ban crypto-related advertisements, Twitter announced on Tuesday that it is following Google and Facebook’s example in banning cryptocurrency related advertisements. This is an attempt to protect users from potential scams that are camouflaged within the crypto market. But this isn’t the only thing that has been causing Ethereum price to drop recently.
Rumors of a Powerful Mining Rig
There are rumors of a new ASIC mining rig from Bitmain. And for this reason, it has driven the price of Etehreum down. What exactly is an ASIC? ASIC stands for application-specific integrated circuit or a chip that is dedicated for a specific purpose of mining a single cryptocurrency. Unfortunately, this doesn’t sound like a good idea because it entails thwarting the decentralized ethos of blockchain tech.
According to analyst Christopher Rolland: “During our travels through Asia last week, we confirmed that Bitmain has already developed an ASIC [application-specific integrated circuit] for mining Ethereum, and is readying the supply chain for shipments in 2Q18”.
He also added that “While Bitmain is likely to be the largest ASIC vendor (currently 70-80% of Bitcoin mining ASICs) and the first to market with this product, we have learned of at least three other companies working on Ethereum ASICs, all at various stages of development”.
What makes this a bad news for Ethereum? Historically, Ethereum has been mined using GPUs or those that have been used for gaming and graphics. However, with ASIC in the market, this would mean a monopoly of mining ability which could potentially create a high barrier among entry-level casual miners.
Mikhail Avady who is the founder of TryMining.com mentioned that “Ethereum is of the most profitable coins available for GPU mining”. Could this development change the overall landscape of Ethereum mining in the future? According to Avady, “It’s going to affect a lot of the market. Without understanding the hash power of these Bitmain machines, we can’t tell if it will make GPUs obsolete or not”.
A Move Towards Other Cryptos
With the production of ASIC, it is possible that Ethereum miners may switch towards Monero and ZCash. However, there is still hope for those who want the old mining climate to maintain. It is possible that it there will be other players that will also produce ASIC chips such as Samsung.
Ethereum is facing a number of challenges lately. In fact, even the ICO launches are being questioned for its utility. If you will ask Sky Guo who works as the CEO of Cypherium, “The price of ETH is becoming consolidated as people become more realistic about blockchain technology”. For the price to come up, he believes that “people are looking for higher quality blockchain projects”.
