Commercial crypto mining in dire straits
Chinese crypto mining company Bitmain is cutting a significant portion of its workforce, while the Japanese tech company GMO is exiting from the market all-together. Both companies and its employees are victim of the bear market that’s still dominating the world of crypto. Lower cryptocurrency prices make it more difficult for miners to make money, which results in less sales at companies that make mining hardware.
Mining any currency at the moment, is not very profitable — if profitable at all. The value of cryptocurrencies is very low, while mining hardware and electricity prices are still quite high. Commercial mining is therefore in decline, opening up the likelihood of mining at home. The difficulty of mining has dropped almost 30 percent since its all-time high in October.
Bitmain is rumored to close entire divisions, while others will see a 50 percent cut. The tech company laid off an entire team dedicated to Bitcoin Cash mining, while it shut an Israeli office earlier as it laid off 23 local employees.
The company had seen tremendous growth this year, going from 1000 employees in January to 3100 by the end of the year. Bitmain calls the cuts an ‘adjustment in staff’.
The reason for GMO to jump ship, is because it has been making tremendous costs during the year. Not only did the price of the currencies dropped, but the profitability of the mining chips dropped as well. GMO only entered the market one year ago, and revealed its 7nm bitcoin miner recently. A decline in user interest made GMO decide to take its losses of 38 billion Yen ($334.5 million).
Interestingly enough, GMO reported ‘a historical performance’ of its cryptocurrency division in November, when the company announced its numbers for the third quarter. GMO made $22.8 million in the third quarter with its mining operation, selling mining hardware and its own exchange.
Apparently GMO has no faith in a recovery of the cryptocurrency market. In 2018 the cryptocurrency market has seen a major correction. Most currencies dropped 85 to even 99 percent in value, while others quit the market all together. Despite the general downtrend, there’s enough reason to still be excited about crypto.
Many banks and traditional exchanges are launching crypto-related products in 2019. There are also some major decisions to be made by the SEC, while plenty investors believe crypto will flourish in 2019.
Originally published at NEDEROB.
