Chinese Crypto Miners Incur Huge Losses As Machines Are Converted To Scrap
Due to losses, mining machines are now being turned off or converted into scrap metal.
Miners Continue To Make Losses
Reports emerging from Shenzhen indicate that cryptocurrency miners have taken over the town with their machines looking for market. At one time, the town was prominent for the electronics industry. At the moment, mining equipment is being sold at a 30% discount. A majority of electronic shops are now stocking plenty of mining devices.
One of the miners identified as Li Chengzen highlighted his journey into the crypto mining sector. Back in 2017, he held a position at a lending firm before quitting and settling in the crypto-mining sector.
According to the miner, early 2018 saw an increase in the number of bitcoin miners in the town. Chengzen stated that competition was stiff due to many players in the sector. He was forced to upgrade his machines in order to remain ahead of the competition.
However, along the way, he encountered challenges in terms of profits. The miner stated that he continued to make losses since the cost of mining bitcoin was higher compared to returns. The industry is no longer returning insane profits like it had before. He pointed out that after a review of his business, the profit margin had dipped by 90%.
Despite the drop, Chengzen says that he is still in the business. He wants to quit the business but it has become difficult selling off his assets. He points out that the latest mining devices area affordable hence nobody wants to buy second-hand items. He has now been forced to dismantle the ASICs and sell them individually as a way of making a profit.
At the moment, mining has become tough for many people due to market volatility. Generally, it is a loss-making and high risk business. Individuals who started mining before 2018 are suffering considering the introduction of newer and more efficient machines. Lacking upgrades on the machines simply means that one is finished.
In China, mining in ethereum has been described as a disaster. The sector has seen the hashrate drop to 250 from 300. This is a clear indication that miners have switched off their GPUs. When they turn to Shenzhen shops owners, they cannot buy them.
With the decentralization of crypto miners, any interested party can join and leave anytime. Some sell their equipment without control hence the lack of profitability. In the long run, buying cryptos can become profitable as compared to mining them. A number of miners have exited the market while others have remained put, hoping that one-day profitability might return.