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The struggle of crypto miners and their chances in the bear market

Dec 24, 2018, 10:34 am

The recent months have not been very glorifying for many crypto trading facilities, especially in Asia and Europe, amidst the massive downfall in the price of different cryptocurrencies and the overall value in the market activities. These turbulent times have led to FT, Bladetech to hold its 85 percent corrections in the crypto market. It is surprising to see that a company that created one of the biggest Bitcoin trading facilities in the UK as a startup has taken this decision to hold its crypt corrections.

Decreasing profit margins

One of the reasons why crypto miners are facing such a headache in the trading facilities is that the profit margins have been squeezed out globally. According to Aron van Ammers, it is the price of Bitcoin that has led to the decline in the profit margin of the crypto miners and the chief technical officer and founder at Outline Ventures is of the opinion that the Bitcoin Trader System might come in as a respite for investors after Bitcoin reached $4000. This trading system will work as a Bitcoin broker, enabling crypto miners to turn a profit by venturing out into trading activities.

The recent research also shows that crypto miners have not made a profit by trading Bitcoin since the middle of 2018 and even the breakeven cost has dropped for most of the miners. Further research on crypto dealings shows that Bitmain, one of the renowned manufacturers for crypto trading equipment that was valued at more than $15 billion, had sold a major portion of their trading equipment in 2018 because of the loss that it incurred during the year. This goes on to show the huge downfall in the profit margin of Bitmain that hit a massive low of 11.6% for one of their main S9 products and the L3 product showed a negative margin of 100%.

The quick decline in the market was unexpected for many. For example, Bitmain was not able to sell one of its flagship trading equipment, the Antiminer S9 because there was a sudden decrease in the demand for Bitcoin trading. Alternatively, researchers also speculated that Bitmain had far too much inventory than they should have, adding to the already huge loss that they had incurred. The situation was very tricky for Bitmain, especially after they had a $1.2 billion inventory according to their books which were almost equal to the 52% of the sales, they recorded in 2017. If they had to write the inventory down, they would have generated more losses apart from the loss-making sales that they had already suffered.

Darker days for individual miners

2018 has been a mixed year for the crypto market. It started off well with all the markets showing relatively positive signs but since July and August, the market started to take a U-turn. Even the most dominant of the crypto trading corporations found it hard to make a significant profit. This comes as bad news for individual miners and all the smaller trading centers as they are expected to incur bigger losses until the market gets stabilized.

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