The continued meltdown in the global cryptocurrency market has forced bitcoin mining hardware suppliers to sell off their machines at fire-sale prices.
Canaan Creative, the world’s second biggest maker of cryptocurrency mining rigs, has already put all its Avalon-brand equipment on sale at US$200 per unit, according to company representative Steven Mosher in an email on Friday.
“You can think about this [price markdown] as me rescheduling Black Friday by a week,” said Mosher, referring to the annual US shopping event that falls on the Friday after Thanksgiving Day. This year, Black Friday was on November 23.
Canaan’s flash sale on Friday, which was first reported by digital currency news site CoinDesk, marked a significant discount programme for the Chinese company, which previously sold its most powerful mining rig model – the AvalonMiner 921 – for US$742.
Over at Huaqiangbei, one of the world’s biggest electronics markets, in the southern coastal city of Shenzhen, vendors are feeling the ripple effects of the crash in bitcoin prices.
Only a handful of shops remain among the dozens that used to sell cryptocurrency mining rigs at a shopping centre in Huaqiangbei. On a Monday afternoon, one of the vendors, surnamed Liu, was taking a nap, while other vendors were slacking off on their smartphones.
“There are almost no shoppers now,” said the 50-year-old Liu. “We have been idle here for two months.”
Liu had set up shop in Huaqiangbei in May this year after being convinced by friends to sell mining hardware. He still has not made any profit after investing more than 1 million yuan in the business. He plans to close shop once his one-year lease ends.
“Here’s a sincere suggestion for those who want to make money with bitcoin: be cautious,” he said.
The mining gear price cuts have come amid a crash in the digital currency market. Prices of bitcoin, the world’s leading cryptocurrency, fell to a 13-month low of about US$3,600 last month, according to data from CoinMarketCap. Bitcoin is currently trading at around US$4,000, down from US$6,400 at the start of November.
The total market value of cryptocurrencies has slumped to US$130 billion, which is less than one-fifth of its worth during the market’s peak in January.
Bitcoin’s deepening crash now rivals its worst-ever bear markets
A clash among supporters of bitcoin cash, the most successful bitcoin offshoot, was largely blamed for the market crash. The world’s fourth largest cryptocurrency split into two distinct entities on November 16 amid long-standing, fundamental disagreements in their developer community.
That meltdown has left miners – those who process transactions in return for new units of cryptocurrency as reward – in a vulnerable position. It has become unprofitable for these enterprises and individuals to run at least four models of bitcoin mining machines, if they consume power at a rate of 0.4 yuan (6 US cents) per kilowatt-hour, according to F2Pool, one of the world’s biggest bitcoin mining pools.
F2Pool, which is headquartered in Beijing, said at least 600,000 bitcoin mining machines have been shut down since the middle of November.
Mining bitcoin uses more energy than what’s needed to excavate gold, platinum or copper: study
The cryptocurrency sell-off prompted miners to remove at least four models of bitcoin mining machines, including the Antminer S7 and Antminer S9 from Bitmain Technologies as well as Canaan’s AvalonMiner 741, because these have become too expensive to operate under present market conditions, according to estimates by F2Pool last month.
While small and mid-sized cryptocurrency miners are likely to take advantage of Canaan’s sales promotion amid the bear market, the big players will buy new mining rigs no matter what, according to Mosher.
“Bitcoin mining is a long-term investment, so I would not spend too much mental energy on a few days of turmoil,” he said.
Cryptocurrency mining rig maker Canaan lets Hong Kong IPO application lapse
Still, the cryptocurrency market slump appears to have had an impact on Canaan’s proposed initial public offering in Hong Kong this year. The company let its IPO application lapse early last month, according to information on the Hong Kong stock exchange website. The company has previously declined to comment on the matter.
The stock exchange and regulators had many questions about its business model and prospects, according to a November 15 report by Reuters, which cited sources close to the deal.
Bitmain, the world’s largest supplier of cryptocurrency mining equipment, and Ebang International still have pending IPO applications with the Hong Kong stock exchange.
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