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Bitcoin

US Mining CEO: Bitcoin Miners Are Being Flushed Out of the Market

Tony Spilotro by Tony Spilotro
4 years ago
in Bitcoin, Cryptocurrency news
Reading Time: 3 mins read
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The CEO of one of the largest cryptocurrency mining firms in North America says miners are being flushed out of the market after Bitcoin’s latest price drop.

Bitcoin Mining No Longer Profitable, Miners Exiting En Masse

While November has typically been among the most profitable months for Bitcoin investors in the past, this November led to the worst single-month decline since August 2011, dropping 37% in a month. Even with Bitcoin having already fallen over 70% from its all-time high of $20,000, full-blown panic didn’t ensue until this break of critical support at $6,000.

With this latest decline, Bitcoin’s price is now well below the price at which Bitcoin mining provides a profitable return on investment, which currently hovers around $4,500.

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Malachi Salcido, CEO of Washington-based cryptocurrency mining firm Salcido Enterprises, said that companies like his own are “entering in the phase when there’s a flushing out of the market,” and that only “relatively few” operations “will come out the other side,” reports Bloomberg.

Related Reading: November Crypto Review: One-Third of Market Wiped Out

According to Salcido, the 22 megawatts of power his firm currently has deployed makes him among one of the largest miners in North America and the United States. The Washington-based cryptocurrency mining firm is building an additional 20 megawatts of power.

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With Bitcoin prices plummeting and reaching levels of unprofitability for most miners, only those – such as Salcido Enterprises – who have access to low energy costs and have significant scale, can stay in operation. Salcido Enterprises’ base operations are located near the Columbia River and are privy to some of the cheapest electricity prices in the entire country.

Salcido pays just three cents per kilowatt hour, which is roughly half of what Bitcoin miners in China are paying.

The mining firm executive has been through three other major Bitcoin price crashes in the past, and is predicting that the “bottom” will be “in February.”

“I expect where we are at to possibly get a little worse before it gets better,” Salcido said.

100,000 Individual Miners Shut Down, Leaving Bitcoin Susceptible

Blockchain research and analysis firm Autonomous Research LLP estimates that 100,000 individual miners have closed up shop after this latest price drop in Bitcoin, causing retail investors, speculators, miners and even hedge funds to capitulate.

Related Reading: Bitmain Launches Crypto Index for Investors

As smaller miners leave the market, mining difficulty lowers and profitability increases for the largest entities, such as Salcido and Chinese-based mining giant Bitmain. But with fewer and fewer companies mining for Bitcoin and thus controlling the network’s hashpower, the crypto asset is increasingly susceptible to a 51-percent attack.

In a 51-percent attack, miners with at least a 51% majority control of the network’s hash rate would gain the ability to alter transactions on the blockchain, and could potentially steal billions of dollars from Bitcoin investors in the process.

Featured image from Shutterstock.
Tags: bitcoinbitcoin miningMalachi SalcidominingSalcido Enterprises
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Tony Spilotro

Tony Spilotro

I'm Tony Spilotro. Behind the pseudonym, I'm a global remote work leader with a decade of award-winning content experience and excellence. Here, I explore my newfound passions pertaining to privacy, finance, economics, politics, cryptography, property rights, and other libertarian-esque views. I am a Bitcoin evangelist, maximalist, and educator whenever I can be, helping to spread its message of freedom from government control, monetary policy mismanagement, and passing the buck - literally – to future generations. My journey from a curious retail crypto investor to a serious Bitcoin advocate, trader, and technical analyst is an unusual one, but life-changing nonetheless and has become less about money and more about a long-overdue revolution. While a firm believer in the laws governing math and science, I am profoundly fascinated by the impact of astrology and astronomy including moon and solar cycles and planetary alignment and their ability to influence and potentially predict markets. It hasn't yet clicked for me as to how to put anything to use, but I consider it my current rabbit hole I can't yet dig out of. My perspective of growing up alongside the internet, the dot com era, the Great Recession, and roots in video games collecting coins and rare items caused Bitcoin to immediately make sense to me. Through all of these lenses, I seek to produce content that is educational and entertaining, and I thank you sincerely for taking the time to read what I have to say. Please follow me on Twitter at @tonyspilotroBTC and feel free to drop me a line if you would like to work together.

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