A Report On Bitcoin Mining: A Money Loser Below $8,600

The Growth Of Bitcoin As The Biggest Cryptocurrency

A fact to be understood is that mining Bitcoin the world’s largest cryptocurrency by market capitalization is seen as not as profitable as once thought according to one team of analysts on the street viewing this as a negative headwind for the price of the volatile digital asset.

In case of Bitcoin fails to break past $ 8,600 soon, thereby analysts at Morgan Stanley expects cryptocurrency mining demand to fall significantly weighing on component makers receiving a boost from high growth business amid the crypto frenzy including Asian chipmaker Taiwan Semiconductor, TSM.

Thereby for $ 8,507, BTC reflects an approximate 57% fall from highs reached near $ 20,000 and a near 600% gain over the most recent 12 months as the digital coin’s stellar run is compared to the benchmark S&P 500’s 13.4% gain over a year leading many once on the sidelines to get into crypto investing due to fear of missing out on the next big thing in tech. it is here that while initial coin offerings have already raked in more money, than the entirety of the previous year, fears of heightened regulation on the red hot cryptocurrency markets that have by now put bitcoin’s rally to a screeching halt and drove a series of sell-offs this year. 

The Hardware Demand Weighing on TSM

According to the Morgan Stanley equity analyst Charlie Chan, in a research note, they estimate the breakeven point for big mining pools should be the US $8,600 as they assume a very low electricity cost as therefore they think the Bitcoin mining hardware demand and price will decline further affecting their wafer demand.

Thereby it was here shares of Taiwan Semiconductor has plummeted on weaker than expected revenue guidance which management attributed to a decline in demand from the mobile sector as well as uncertainty in cryptocurrency mining demand. It was then that Morgan Stanley estimates that the semiconductor company attributes 10% of its revenue to the cryptocurrency mining demand. 

Chan adds that they think the injection of new mining capacity has thereby further increased the mining difficulty in 2H16 believing mining profits would drop rapidly according to their simulation. Thereby the investment bank expects companies that sell specialized mining chips to break even over two years if Bitcoin trades near $ 5,000. 

Why Does Intel Apply For Patent On Crypto Mining Chip

As it is sure that Bitcoin mining is getting faster, Intel Corp. INTC recently filed a patent for a system-on-a-chip including hardware to accelerate Bitcoin mining and reduce its power consumption. To remind this is how the hardware is optimized and to reduce space and energy utilized during the processes Bitcoin’s energy consumption was first highlighted by news reports after the cryptocurrency’s price began spiraling upward. Therefore the proof of work consensus system used by the cryptocurrency consumes massive power in the form of energy consumption by nodes that are a part of bitcoin’s network with energy consumption is primarily used for solving complex mathematical problems required to earn coins. While this was not a problem as there were fewer Bitcoin and relatively less inflation in the cryptocurrency’s price. It was due to bitcoin’s supply schedule that has ramped up in recent times thereby the amount of energy used by its systems in its network has multiplied whereby according to some estimates the Bitcoin mining would rank 42nd in terms of energy consumption if it were a country.

To take on it thereby Intel’s proposed system now consists of multiple elements including a processor farm, logic device, and an integrated circuit working by reducing the search space required to determine the next nonce required to solve the problem. In case the solution is not found, Intel’s chip changes the Merkle tree or order of transactions that have not been processed and starts with another nonce search. There are in most current systems expending brute force to solve a problem.  

What Is The Energy Consumption Problem 

Thereby Intel now joins a slew of other technology companies in making Bitcoin mining chips like Samsung Electronics Co. Ltd engaged in making Bitcoin mining chips linked to a partnership with a Chinese distributor. These analysts had earlier jacked up price targets for NVIDIA Corp. and Advanced Micro Devices that are makers of graphic processing units used in Bitcoin mining anticipating increased sales to Bitcoin mining companies’ on the back of a rise in prices for Bitcoin.

However, they slashed those targets after news that Bitmain which is the world’s biggest Bitcoin miner has developed a new application-specific integrated circuit which is a chip that has superior performance to GPUs in conjunction with a Chinese firm. Thereby Intel’s, SOC can be run on an array of chips including ASICs and GPUs.