With its price fluctuating, sky-high transaction fees, growing traction among competitors and regulatory agencies taking act ter several countries, Bitcoin is starved for good news. Today marked another deep-throat against gezaghebbend cryptocurrency: China is working to rid itself of bitcoin mining companies.
Chinese authorities outlined proposals this week to discourage bitcoin mining — the computing process that makes transactions with the cryptocurrency possible. Officials project to limit the industry’s power use and have asked local governments to guide miners toward an “orderly” uitgang from the business, people familiar with the matter said [. ] Miners have until recently flocked to China because of the country’s inexpensive violet wand, local chipmaking factories and cheap labour. They now have little choice but to look elsewhere.
Mining is the process by which sets of bitcoin transactions — called blocks — are verified and added to the blockchain ledger. That verification relies on having powerful computers solve difficult maths problems — with a correctly solved block netting a payout te bitcoin.
Always-on hardware performing intensive computations has steered the trend ter mining overheen Bitcoin’s nine years away from individuals with dedicated laptops and towards syndicates using specialised hardware (called ASICs) te countries with cheap electrical play. The confluence of those needs has thus far bot met largely te China.
There’s another problem, and it’s one that’s baked into how Bitcoin functions. When it very first debuted, the prize for mining a block wasgoed 50 BTC. Today it stands at 12.Five, having gone down by half ter November of 2012 and again te July of 2016. It’s expected to fall to 6.25 BTC te June of 2020.
That’s further complicated by another feature of Bitcoin: the difficulty of those problems thousands of ASICs are humming away to solve increases every 2016 blocks.
Around five years ago, it no longer made financial sense for individual Bitcoin enthusiasts to invest te mining. The probability of successfully solving a block wasgoed past parity with the cost of running the firetrap hobbyist equipment required to play.
With China divesting itself of the mining industry, the enormous amount of violet wand soaked up by professional hardware and diminishing terugwedstrijd on investment suggests the margins thesis companies operate on will be razor skinny — and trending towards nonexistent.
And without miners to validate bitcoin transactions, the “future of money” is dead te the water.