According to F2Pool, the third largest mining pool, between 600,000 and 800,000 bitcoin miners have shut down business. They have shut down at a rapid pace and done so by mid-November.

Why have bitcoin miners shut down?

Mao Shixing is the founder of F2Pool and told Coindesk bases his estimates on the number of miners that have shut down on different metrics. These metrics consists of the total hashrate drop and the average hash power of older mining machines that see losses at current bitcoin price levels.

Blockchain.info provides data from the entirety of the Bitcoin blockchains hashrate. In simple terms, the data capture the aggregated computing power on the world’s first blockchain. It has dropped from around 47 million tera hashes per second (TH/s) to 41 million. The fall happened from 10th of November to the 24th of November and represent a 13 per cent decline.

Shixing explained that the decline of miners happened because of that many used older models. Models such as Antminer T9+ made by Bitmain and AvalonMiner 741 by Canaan Creative. These models only have a hash power of 10 TH/s and are losing money at the current value of bitcoin, according to F2Pool.

F2Pools mining activity has fallen dramatically during the past weeks. Mao revealed that the hashrate of the network on F2pool, accounting for around 11.4 per cent of the total network, has declined over 10 per cent in the last few weeks.

“It’s hard to calculate a precise number of miners connected to us that had unplugged. But we saw over tens of thousands of them [shut down] in the past several days based on conversations we had with larger farms that we are in regular contact with,” he added.

What is contributing to the shutdown of miners?

Recently, Mao shared a picture of a man packing computer gear into boxes on his Weibo social media account. A story previously covered by Toshi Times. He captioned the post with “shutting down is not an option, now have to sell by the kilos”. “ Those miners being sold by the kilos are even older and obsolete models that aren’t usable anymore. So people are selling to recycle them like copper instead of for further mining purposes,” Mao explained.

Mao explains that several factors are contributing to the shutdown. One of them is the market decline which was triggered by the bitcoin cash hard fork. Winter is also coming in China which means that electricity price will rise. Another reason is that newer mining models are out in the market which makes older machines non-competitive. The top cryptocurrency bitcoin sank below $4,000 and is now posing problems for mining farms, especially those using machines of 2016 and 2017 that has lower productivity, Mao explained. He added:

“All these factors are overlapping right now which led to this recent phenomenon.”

Photo by Tim Mossholder from Pexels