As we’ve been following for you here on CCN, Cloud Mining has been taking a beating with the precipitous drop in Bitcoin price over the lasts several months. The profit margins have become thinner and thinner, and now may be non-existent for many in the industry. Some reports have as many as 30,000 miners leaving the industry since BTC has entered the $300-and-below range. Many Bitcoin critics are eager to take this as a sign of Bitcoin’s inherent weakness of value. Is that the case? Can this purging of clouded, corporate miners, in fact, be a good thing?
In order to take advantage of the swollen BTC price in late 2013, the “Cloud Hashing” or corporate cloud mining industry took off. Plenty of people worldwide suddenly became very interested in investing in the cloud mining concept. The amount of miners has passed 75000 in total. Question is: Does Bitcoin need 75k+ miners to be effective?
MIT’s Technology Review spoke with Harvard Associate Professor Benjamin Edelman. His research on Bitcoin says to him that these current issues can cause a more widespread problem in the industry.
“I think that miners are pulling out and dumping Bitcoin to make up for lost revenue, which itself changes the value,” says Edelman. Those that do continue mining will contribute to the problem because they will have to immediately sell any Bitcoins they mine, he says.
Another reaction by the Bitcoin community could be that home miners re-enter the market. This war of attrition doesn’t necessarily mean there aren’t enough miners. The mix of corporate investors and small-time home miners can change back to the mix it was before the bubble in late 2013. Maybe the problem with Bitcoin has been too many chefs in the kitchen? Bitcoin price in US Dollar values didn’t have any problem rising thousands of percent in value annually when cloud mining was just a novel idea not ready for prime time. It seems the mom-and-pop miners, who were working from home, were doing a fine job by BTC. The difficulty in the algorithm is adjusting as we speak so the CPU rate remains consistent.
What I know about mining fits in a thimble, but you have to admit Bitcoin price, if that is a measure of strength you use (I do not), was rising very consistently before the era of Cloud Hashing. I would rather have more mining jobs, and more decentralized mining than larger groups of investors and corporations dominating the heart of Bitcoin, just to earn a fast buck. Maybe a “back to basics” approach to mining is just what the doctor ordered for BTC, and it is price?
To me, it matters not, because Bitcoin’s value goes well beyond any mere US Dollar price. If you simply see Bitcoin as an investment, that’s a bigger problem than any relative price drop. Bitcoin is a revolutionary global information technology long before it was a speculative investment asset. Govern your actions accordingly.
Would you notice if cloud miners went away tomorrow? Does the Bitcoin currency and community need more home miners who can compete without several blade servers? Share above and comment below.