If you have a Bitcoin miner, activate it

Over the past few weeks, the Bitcoin (BTC) mining market has seen a black swan event, causing a lot of uncertainty and confusion about the future of the market. This is why I thought it was fair to give the public a quick update and explain why it is a fantastic time for Bitcoin mining in the United States.

Bitcoin miners are rewarded for securing the network and for each block they mine. As more miners participate, the difficulty rate increases and the reward for each minor’s safety contribution decreases. And vice versa, when fewer miners participate, the difficulty rate decreases and the reward for each miner’s contribution increases. Understanding this is key to explaining why it is such an exciting time to get started in mining.

Related: A trade war misstep? China cedes crypto battlefield to US banks

Recently, we have seen a historic drop in the difficulty rate. This graph shows the initial impact of Chinese miners being forced to shut down and leave China.

Related: China crackdown shows industrial Bitcoin mining a problem for decentralization

There are many potential reasons why this has happened, but the net result is that an exodus of Chinese miners and their equipment has started. As of July 2, the rate had been adjusted by -27.94%. It was the fourth consecutive negative adjustment, “the difficulty rate having almost halved since mid-May”.

Let’s take a look at the most recent block time intervals.

Even with record Bitcoin prices, we still anticipate further rate cuts in the near future.

However, the decrease in difficulty was not over at this point, and with the further drop of over 27% in early July, the volatility is still there as the network catches up with the effects of disconnecting all of these miners. These events have caused many dramatic and rapid changes in the crypto mining market, but their impacts can be boiled down to three major changes:

• There is a dearth of low-cost power extraction locations and power infrastructure in the market. There is simply not enough infrastructure to absorb the demand from Chinese miners.
• Equipment prices are falling rapidly and profitability is increasing for miners. We believe equipment prices will drop to historically low levels given the influx of equipment, as mining profitability soars. As a result, we estimate that mining profitability will increase by 35% after adjusting the difficulty.
• Inexpensive electrical pitches can take a year or more to negotiate, contract and develop. Under these circumstances, current operators have a unique opportunity as they have already established resources and partnerships that they can use.

The last time the difficulty rate was around $ 15 trillion was in January 2020, with Bitcoin only worth $ 7,000. Currently, the price of BTC is around $ 32,000, more than four times higher. With cheap hardware for mining and the high price of Bitcoin, the opportunity for Bitcoin mining has never looked better. Right now, it’s not about mining equipment, it’s about infrastructure.

As all investors know, the time to invest is when the costs are greatly reduced. For Bitcoin mining, it’s now.

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should do their own research before making a decision.

The views, thoughts and opinions expressed here are those of the author alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.