Market manipulation is a common topic in the digital currency space, often driven by concerns that whale investors may be manipulating cryptocurrency prices and trends to maximize their own profits. But could Bitmain, the mining hardware manufacturer, be preparing for a devilish scheme to crush outdated mining operations?
As the price of BTC hovers between $10,000 and 11,000, and could be a couple of big days away from its all time high, it remains popular as a mining option. CoinGeek has learned from its sources that Bitmain may be planning to take advantage of the current environment by using their resources to crush the profits of older mining hardware.
They’ll accomplish this goal by bringing as much hash to bare on the BTC blockchain as they possibly can, through old mining rigs and new, effectively cranking up the difficulty of BTC mining. Block rewards will be nearly impossible to win for those with older hardware.
For miners, and especially Chinese miners, this could be disaster. With a small leap in total hashing power brought to bear on the BTC blockchain, the increase in difficulty will devastate profits for most miners. They will be holding on and praying that electricity rates stay low to make any profit at all.
The Chinese hydro season, or when rains are sufficient enough to keep hydroelectricity flowing cheaply, can help make crypto mining more profitable. That season typically lasts into September or October. As the dams begin to dry up, electricity costs will steadily increase. That, combined with an increase in hash power, will completely crash mining profits.
The intended consequence of this gambit is simple. To stay competitive in the mining sector, operations will be forced to upgrade to the latest hardware, perhaps from Bitmain, or run their operation into the red against the hash power of Bitmain.
This could end up being a fairly profitable venture for Bitmain if it works, but our sources are worried it will be a bloodbath for the BTC mining community. Operations that can’t afford to upgrade will be run into the ground, and those that can will be paying a premium just to help Bitmain’s bottom line.
This isn’t what miners need right now. With the long crypto winter of 2018 still very recent in their memory, many operations are still working to get their head above water for all the deficits they had to run for so long. And now that BTC prices have recovered, competition is naturally making mining more expensive. Operations having to spend $0.08 or more per kilowatthour (kWh) are already likely back in the red.
If these reports are true, Bitmain might be about to cripple the mining industry for their own short term profit. Not exactly the community building move that the crypto world needs right now.