How do Miners Expand Operations without Risking their Crypto
Why Bitcoin Mining Costs Grow Overtime
Satoshi Nakamoto’s intention for Bitcoin was mining on central processing units (CPUs). However, developers soon uncovered new software that would increase hashing power from graphics cards. Miners have since transitioned from utilizing CPUs to application-specific integrated circuits (ASICs) for more efficiency.
The cost of a new ASIC mining rig can run from $500 to tens of thousands, and that is just one piece to the puzzle. Cooling fans, backup generators, and special power supplies are often necessary to source electricity for mining pools. If miners decide to expand their operations, they must invest in more equipment.
Electricity costs is another critical concern for many miners, which vary greatly depending on a miner’s location. Similarly, the hash rate/power consumption ratio to power their operation presents a moving target. An ideal output would have a high hash rate and low power consumption to generate profit.
The Future Of Mining In China
The infamous banning of crypto related programs on the social app WeChat in 2018 led to a cascade of news outlets focused around blockchain and cryptocurrencies to be shut down. Chinese authorities are now looking to block access to 124 websites operated offshore that provide crypto trading services to mainland China. The decentralized aspect of cryptocurrency presents red flags to traditional banking industries.
There is still the unanswered question of whether the Chinese government will ever fully open up the market to digital currency. Experts on this topic tend to lean toward adverse adoption however the current market status indicates otherwise. Many would believe this negative outlook would cause the cryptocurrency market to decline but instead it has created an ongoing progression.
The mining community, in particular, has been growing rapidly. Veteran miners are looking to expand their operations to guarantee the optimized hashing power. An increasing number of new miners are looking to join mining pools to help secure the network. Even mining-related industries such as the production of mining machines are flourishing all due to the increase in demand.
Increasing Mining Difficulties Leads To The Need Of Expanding Operations
Today, Bitcoin mining difficulty reached a new high 9.06 trillion due to the increase in hashing power. If miners want to expand their operations, they have to consider the expenses needed to grow often leading to liquidating their hard-earned crypto assets.
Most miners will fail to gain any investment returns if the hashing difficulty increases by up to 3%. Lower consumption miners have a better performance than those with high consumption. The investment would take somewhere between 200 to 350 days to pay for itself for BTC. Waiting this long for a payoff period may not be sustainable for some miners. For this reason, they may choose to liquidate their crypto or make risky trades.
Often, miners look for other ways to cut costs while still generating revenue. If selling off their earned crypto is not an option, many look to collaborative solutions. Some miners choose to join a group or mining pool to aggregate power and split the profit. The goal of mining pools is to have a unified system to increase the hash rate.
Higher hash rates mean more capital invested into a mining pool operation, resulting in better security, an expanded ecosystem, higher currency variety, and more. These advantages attract more hash power to join into mining pools that are already on a successful track. That said, new players entering the bitcoin mining world often need significant upfront to spend to build farms that can compete with the existing mammoths in place today
Babel Finance Solutions
Miners looking to grow their operation will find that expenses can become daunting. These costs might force miners to liquidate their crypto as their final resort. At Babel Finance we want to let miners have the option to open an instant crypto-backed loan. Any miner can receive a flexible line of credit issued in real-time with no credit check necessary.
At Babel Finance, we do our best to help inform our mining community about present solutions to mitigate expenses when possible. Miners have the opportunity to enhance liquidity and gain the flexibility to capitalize growth by applying for a Babel Loan tailored to their needs.
Babel Finance also has taken proactive steps to build strategic partnerships to assist miners. For instance, we maintain a partnership with the largest electricity provider in the southwestern region of China, Sichuan Heng Jia Group, powers Yunnan, Sichuan, and Guizhou. This provides miners in the region with the most cost-efficient electricity. Our goal is to encourage the continuation of prosperous mining operations.
Miners have the option to use our Babel Finance deposit services achieving returns as high as 6–12% annualized interest depending on their crypto assets. All assets are secured offline and through multi-signatures, so miners can safely know their funds will return once deposited.
To secure all crypto assets, Babel Finance has partnered with compliance institution Cobo Custody and China’s top mining pool, Poolin.
Babel Finance is on a mission to support the entire blockchain network. Miners are able to access crypto-based financial products without risking their earnings. As the network strengthens, miners can grow their profitable operations with confidence.