The real winter is already approaching, which means that it will become doubly colder on the crypto market. For several months now, there has been a bearish cycle, quotes are not growing, and therefore the industry is going through hard times. Not only traders, investors and startup owners have faced difficulties. Cryptocurrency miners have also been hit hard.
What should miners do in a bearish cycle? How to minimize losses and not get bogged down in debt? Dmitry Avdeev, an expert on TTM mining at the Academy, during an interview spoke in detail about how miners of digital assets survive the crypto winter, and how the current situation will affect the industry as a whole.
– How does the mining market survive in a bear cycle? How did the fall in quotes and the crypto winter affect the affairs of large companies and private miners?
The market is noticeably thinning, because for those who have expensive electricity, there is no other choice but to turn off their equipment until better times, or start selling. Moreover, if private miners can still allow mining for the future in the hope of an increase in the mined cryptocurrency, then for large companies there is nothing to pay for electricity and rent, so they have a much higher chance of going bankrupt.
–Why does a bear market have a negative impact on cryptocurrency miners as well? In fact, the amount of crypto that they mine does not change, the costs remain the same and you just need to wait out the period of low quotes.
That’s right, but if the value of the mined currency falls in terms of fiat money, then income in fiat currency also falls. And miners pay for electricity, rent, and someone even for loans in fiat funds, and more likely over time only more. At the moment, for many miners, income does not cover expenses.
–If we talk about the current situation of miners, is it just a slight decrease in income or even work in the red?
It all depends on the equipment, the cost of electricity and conditions. For example, for the latest ASIC revisions, if there is no rent even with expensive electricity, now it’s just a decrease in income and profit. If electricity is conditionally free, then the equipment cannot work in the negative, which means that there is simply a decrease in profits. For some graphics cards and cheap electricity, there is also a decrease in profits (significant). For old video cards, as well as for expensive electricity, work is in the negative. Also, for inexperienced owners of rigs on video cards, there may be a loss, because. not everyone knows what and how to switch from the Ethash algorithm. With rent now, no one can have a job in plus.
–Can we say that a bear market is a good time to start mining?
If you firmly believe in the cyclical nature of all events, then, of course, you need to buy equipment precisely when everything is in decline, because. equipment prices are much lower. But here you still need to see if new video cards / ASICs should come out in the near future, which can be much more energy efficient than the current ones. If they must, then you need to think carefully, calculate everything and, perhaps, it is better to wait for them. Moreover, it’s impossible to calculate everything in advance – new equipment may not give the expected effect, as was the case with AMD video cards of the latest 6000 generation – they turned out to be worse than the previous 5000 generation, which often turned out to be more profitable for mining than offers from NVidia.
–Why do many miners, amid a falling market, begin to sell equipment in a hurry? How justified is this decision?
Quite justified. Firstly, not everyone believes that there will be further growth and profitability will ever return. Secondly, after the end of the PoW period in Ethereum, the market is oversaturated with miners with video cards like never before. Thirdly, it’s time for someone to get rid of worn-out equipment, either for the first two reasons, or in anticipation of a new, more energy efficient one.
–The miners were doubly unlucky: the crypto winter coincided with the transition of Ethereum to PoS, which made mining the second most popular one impossible. In your opinion, will the overlapping of these events lead to serious problems in the industry?
Already led. At a minimum, the operation of the entire Ethereum network is no longer supported by miners, which means it may be more vulnerable. Now there are many who do not believe in mining, and for many of them it was the only window to the world of cryptocurrencies and blockchain, so there may be an outflow of users not only from mining, but also from the world of blockchain. On the other hand, this world will get rid of unskilled users, and the rest will study other coins, other pools and technologies.
–What should cryptocurrency miners do who bought equipment on credit and hoped for a quick payback? How can they minimize losses in the face of a market loss?
They would do well to study at the TTM Academy and not be afraid to ask questions there. And for those who got into this story, we can advise you not to lose heart, there is always a way out – to sell the equipment now or later, when the market goes up, or to mine and save crypto in the hope of surviving until this very moment of the next growth. There is also a good reason to study which coins are more profitable, how to set up equipment for higher energy efficiency, etc.
–Is there any threat to large mining companies? How negatively can crypto winter affect their income?
The longer the crypto winter drags on, the higher the threat of bankruptcy. Again, no one guarantees that it will ever end. In this case, it is better to sell everything now. But if the crypto spring comes to an end soon, it will be very disappointing. In any case, if there is not enough money on the balance sheet to pay for electricity and rent, this is already a big problem.
–And what is the best way for private miners to survive the crypto winter?
Reduce energy consumption, get rid of the most inefficient equipment, constantly monitor what is the most profitable and try to mine it, in no case withdraw crypto assets to pay for electricity and for household expenses.
–What crypto assets should miners pay attention to during a market fall? Or is there no difference in crypto winter conditions what to mine?
Miners generally should not pay attention to what traders hear. Its own separate community, its own tools for checking profit. This is where you have to cook.
–Some experts believe that the decline in the crypto market has a positive effect on the mining industry, since during such periods old and inefficient equipment is turned off. What can you say about this?
Absolutely right. Moreover, many turn on their heads and they begin to understand energy efficiency, what is a hash per watt, and other optimizations. And whoever’s head is not able to turn on – the entire crypto community is cleared of such users.
–Will mining survive all these negative events? Can we expect a mass exit of players from the industry?
Survive as usual, a holy place is never empty. A massive exit of players from the mining industry occurs every crypto winter, because this is not a gold mine – it is painstaking work on the selection, assembly, configuration and further administration of equipment. For many, this is simply not suitable, so the crypto winter helps them switch to more familiar ways of earning. Then, a new inexperienced community comes to the crypto-flight, and often those who left everything in the last / before last crypto-winter mining come back.
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