This week I’ve seen some talk about Bitcoin again after a period where it seemed to garner little attention. At the time of writing the price of Bitcoin is around $4,300 which is significantly lower than its peak at around $17,900 in November of 2017. According to CoinDesk, a news site focused on cryptocurrencies, between 600-800 thousand Bitcoin miners have shut down since mid-November. This is due to higher electricity prices in China and a lower Bitcoin price which makes Bitcoin mining less profitable. Let’s take a look at what the consequences of the decline in Bitcoin mining are. First off, less mining is good news for the environment as the mining process is energy intensive. According to The Economist, mining used roughly the same amount of energy as Ireland in 2017. Another area where the decline of Bitcoin mining will be good news is in the PC videogaming community. This may sound bizarre but as it turns out mining and videogaming similar hardware, mainly graphics cards. In order to mine Bitcoin one’s computer needs to perform advanced calculation which graphics cards tend to be very good at. For example, Techradar lists the Nvidia GTX 1080 TI as one of the best cards for mining despite it being built for high-end PC gaming. It was fairly common to hear complaints about miners in tech-savvy gaming communities over the last year as the demand for high-end graphics cards from miners put an upwards pressure of prices. Assuming that Bitcoin prices won’t make a miraculous recovery it’s reasonable to assume that prices for gaming graphics cards will drop to regular levels. That said, this is obviously bad news for the makers of such cards. I expect Nvidia and AMD, the two largest gaming graphics card makers to underperform relative to estimates in the coming months. Of course this is worse still for those firms which specialised in crypto currency mining, selling hardware designed for mining.
It might seem appealing to buy Bitcoin now but I think it will continue to fall. It certainly isn’t a currency and it seems far to volatile to be a desirable asset. But there are others who are better at analysing Bitcoin than me, my goal here is to highlight some of the less discussed possible side effects.
Sources:
The Economist Espresso
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