Cryptocurrency mining manufacturer Bitmain has made USD 2.5 billion of profits in the past year, received billions of USD of investment and is about to conduct an initial public offering (IPO) that will bring in USD 18 billion. With this money, Bitmain has been creating mining supersites, mining farms on a scale never seen before. Other major cryptocurrency mining firms, like Coinmint, are also building similar sites. These are expected to make personal mining obsolete in the next year or two.
A race against becoming obsolete
Cryptocurrency mining’s history is a history of technology becoming obsolete. At first, Bitcoin’s hash rate was so low that computer processing units (CPUs) on personal computers were enough to profitably mine Bitcoin. Then, someone wrote a program that could mine Bitcoin with graphics processing units (GPUs) and CPU mining became unprofitable and obsolete. Then, application specific integrated circuits (ASICs) were created that mined Bitcoin far more efficiently and profitably, making GPU mining for Bitcoin obsolete.
Numerous other cryptocurrencies have been created that block ASIC mining, so GPU and CPU mining for these remain feasible. However, for Bitcoin, ASIC is the only way to profitably mine. For years, individuals have been able to purchase ASIC mining rigs to personally mine Bitcoin. However, mining supersites have strong potential to cause personal mining to become obsolet, and at that point, the only profitable mining will be occurring at these mining supersites owned by firms with billions of dollars.
Coinmint is purchasing an old aluminum processing plant in New York and spending USD 700 million to turn it into a mining supersite. Bitmain is doing the same thing in Texas and spending USD 500 million. The fact is that the more you spend on mining equipment, when doing proper research, the cheaper you get the hashrate. These major mining firms have the best connections to mining equipment and the most money to buy mining rigs, so they will get hash rate far cheaper than individual miners or even small mining companies.
As these mining supersites go online, the mining hashrate will skyrocket. Already, Bitcoin’s hashrate has exceeded 50 exahash/s for a brief time and is now hovering over 40 exahash/s. This might be the first taste of these mining supersites going online around the world. Even though Bitcoin’s price has dropped significantly, it is still profitable to create these mining supersites and these big crypto mining firms have the money to do it, so Bitcoin’s hash rate will likely continue to rapidly rise long term even if personal mining operations have to shut down.
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