It seems that the crypto mining industry is not being profitable for small and medium-sized companies in China. According to some local reports, small and medium-scale miners could leave the market and allow larger companies to take the lead. The main problem is related to the bear trend in which the market is since the beginning of the year and growing maintenance costs.
The cryptocurrency mining industry is not as attractive as it used to be at the beginning of the year or the end of 2017. Bitcoin prices were higher and the maintenance costs were lower. As new miners entered the market, difficulty increased at the same time that prices were falling.
This has clearly affected Luo Jun, a crypto investor that has been affected by these issues. According to Jun, the gross profit margin was reduced between 40% and 50% this year. He explained that the risks are becoming higher with the return cycle expanding.
At the beginning of the year, several rumours circulated on the internet about China investigating those mining virtual currencies. At the same time, as he is located in the mountains, he experienced three landslides during the time he was working at these installations. Now, he is considering opening a supermarket or a hotel in Chengdu.
Xiao Wu, one of their employee, said that Bitcoin’s bear market will have a deep effect in the mining industry all over the world. Large companies will increase their computing power and disrupt the market, but smaller miners will have to leave.
Electricity costs are among the most expensive things to take into account at the time of starting a mining farm. Unit computing power and electricity consumption should be taken into account when planning an investment in the crypto mining world. If the machines used to mine virtual currencies are not powerful enough, the cost to mine Bitcoin exceeds the revenues generated.
There are some farms that are not able to have electricity from renewable sources. This is why increasing electricity prices in some areas could have a deep effect on some smaller mining farms. If these firms are not able to find a good use case for the machines they bought to mine Bitcoin, they might go bankrupt.