Bitcoin miners worry about 'crypto winter'

 Many companies specializing in Bitcoin mining are tightening operations and accumulation



According to observers, the Bitcoin mining industry is in a difficult atmosphere and is witnessing great change. Uncertainty reminds many of the "crypto winter" of 2018.

"Crypto winter" is the term for the gloomy period of the cryptocurrency market, when the prices of coins continuously fall and are difficult to recover for a long time. Along with that is a series of bad news such as theft, fraud, bans of managers. "Winter" usually occurs on a 3-4 year cycle, and the most recent one was in late 2017 and early 2018, when the price of Bitcoin dropped from $20,000 to $3,000. This level lasted for more than a year, causing a series of mining rigs around the world to build mats, falling prices, many investors fell into empty hands.

The field of cryptocurrency mining is currently considered to be very sensitive to world fluctuations. For instance, as the Russia-Ukraine war unfolds, many predict Bitcoin will rally as it is a relatively safe haven asset amid uncertainty. However, the price of cryptocurrencies is still down 40% compared to November 2021, and the share price of mining companies such as Marathon Digital Holdings, Hut 8 Mining or Riot Blockchain (USA) also decreased by more than 60%.

One of the issues that cryptocurrency miners are concerned with is the break-even rate. However, electricity prices - which account for more than half of the cost - are also rising. Fred Thiel, CEO of Marathon Digital Holdings, admitted the company is considering taking some Bitcoin mining rigs offline to avoid losses.

Bitcoin miners say that after a period of strong growth, they are beginning to prepare for a scenario where the digital currency drops below the $20,000 mark per coin, halving from the current $41,000. “We are charting our plan, although we will continue to scale the miner this year,” Jason Les, CEO of Riot Blockchain, told Bloomberg. "But for a mature field like Bitcoin mining, it's a risky decision."

Companies are also turning to a number of other ways to keep their assets safe, like lending, staking or buying hedging against existing Bitcoins. Besides, miners also join hands with mainstream industries like gaming or energy to increase the number of Bitcoins earned.

Before that, many experts predicted the "crypto winter". Vitalik Buterin, co-founder of the Ethereum blockchain, thinks that after a period of strong growth, it is time for the cryptocurrency market to need a decline. However, this is actually a good signal and users can comfortably accept it instead of being afraid like four years ago. Forbes quoted analysts from UBS Bank as saying that there are three signs that winter will happen, which is the policy of tightening monetary policy of the US Federal Reserve (FED); limitations of blockchain technology, especially the transaction speed is not high and there are many risks; and a series of negative information from regulatory agencies around the world recently.
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