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Low Price Fails to Derail Bitcoin Mining Companies’ Expansion

Avatar Guest Author 4 years ago

Compared to the 2014 rout, Bitcoin price seems to have stabilized near lower levels. Many in the industry expected at least a shutdown of the major businesses involved in Bitcoin mining. But as the price forms a base near $200-220, Bitcoin mining companies are sensing an opportunity to expand their infrastructure and increase their market share.

Two of the world’s leading Bitcoin mining companies, BitFury and KnCMiner, are going ahead with their expansion plans even in the current low-price environment. BitFury recently announced that it is acquiring a privatized land plot in the Republic of Georgia where it plans to build a huge data center to host its mining hardware. KncMiner also revealed its intentions to build a new 20MW greenfield datacenter in The Node Pole, Sweden.

Margins Have Shrunk, Will They Succeed?

Bitcoin mining companies have witnessed a significant decline in margins post the biblical collapse from $1,100 to $200. Many of the businesses eventually shut their shops as the price failed to rebound, making the mining processes highly uneconomical.

In January this year, a mining company called CoinTerra was sued for over $5 million by C7 Data Centers as it was unable to pay its bills following the drop in value. The mining company later filed for bankruptcy.

But the two leading companies remain fairly confident of their land acquisitions. BitFury, which currently has a data center in Iceland said: “Georgia offered low energy costs, a competitive labor market, an attractive investment climate, and was generally an easy place to conduct business.

CEO & Co-founder of KnCMiner Sam Cole said: “Leading the way forward in one of the most rapidly expanding global markets is an equally demanding and inspiring task. Time-to-market is everything and we are very happy with how the local municipality, Boden Business Agency, and the regional competences within The Node Pole have all come together to help us expand.

It would be interesting to see how these companies are able to weather the low-price environment, eke out profits, and what would their next steps be if the price were to go down again.

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