Against the fearful anticipation of many analysts, Bitcoin fought the dipping trajectory and reached $4,000 mark on Sunday. Analysts were predicting that the world’s largest cryptocurrency might roll down the mark of 3,000 dollars.
However, on the other hand, Bitcoin performance in the mining sector faced a decline. The number of miners participating in the Bitcoin network dropped by 7 percent in the last seven days. The downfall could be traced from the market symptoms from the last month too when as per the reports from CCN, Chinese crypto miners ‘dumped their mining rigs.’ They rather went into making better use of them through ‘video rendering and cloud computing.’
“In the light of the Bitcoin Blockchain’s reduced hash rate caused by withdrawing miners, the network is designed to automatically adjust the difficulty level in order to avoid a situation where there are a huge transaction confirmation backlog and high confirmation fees. The 7 percent drop in difficulty is likely to be the start of a similar difficulty readjustment pattern as Bitcoin below 6,000 dollars increasingly becomes a prolonged reality.”– David Hundeyin, as per the reports by CCN.
The mining industry due to the 85 percent correction in the crypto market has affected many European and Asian mining start-ups and facilities. As per the reports from FT, Bladetech (a U.K. start-up that emerged in the month of March) has put its mining plans on hold. Similarly, many Asian and other European mining operations are closing down. Experts blame the shut down to the bear mentality of the crypto market.
A decline in the reachable Bitcoin nodes:
As per the reports from Bitnodes, the reachable nodes on the Bitcoin Blockchain saw a drop of 18.98 percent, i.e. from 11,845 to 9,597. Whereas, the unreachable nodes on the Bitcoin Blockchain also saw a downturn of 33 percent, that led to a fall from 98,000 to 65,000. This dropped down roots in several miners have been seen shutting down their full nodes on the Bitcoin network.
As per some researchers, many crypto miners have been seen mining Bitcoin and other major crypto assets at a loss since June-July this year, due to the fall in the Bitcoin rates. The research department of one of the major crypto exchanges- BitMEX Research, says that Bitmain (approximately worth 15 Billion dollars) has recently sold off the majority of its mining equipment while bearing a loss earlier this year. It has braved a negative profit margin of 11.6 percent for the main S9 product. For its L3 product, it saw a negative profit margin of 100 percent.
The drop in the mining industry may lead to an increase in the centralization of the network. This might happen as the control will go in the hands of less number of entities. As a result, the number of attacks and double spends may see a drastic rise. If bear market mentality continues in the Bitcoin crypto market, Bitcoin may have to see hard times.