Gorilla Pool Founder warns of financial
risk for miners and explores what the future might look
like
MIAMI,
July 15,
2024 /PRNewswire/ --
Chief Bitcoin Historian and CEO & Founder of
Gorilla Pool, Kurt Wuckert Jr. had some strong words of
warning about a massive shift in Bitcoin
mining economics as he spoke
to an audience in Miami at Crypto Connect Palm Beach
recently.
Kurt said, "I can't
in good conscience ask you to spend your money on blockchain assets
or mining equipment because of what is transpiring in the
background right now. Mining SHA256 blockchains is near a six-year
low in profitability although the price of BTC is still hovering
around all-time highs."
For many years there has been the idea in
Bitcoin that the price of bitcoin follows its hash rate as some
kind of leading indicator. This notion has been particularly
prevalent among proponents of
BTC, who have long maintained that
as more computational power is devoted to mining, the price of BTC
will naturally increase. However, recent developments, especially
those observed across BCH and
BSV, have debunked this myth,
revealing a more complex and (in some cases) manipulated
relationship between price and hash rate.
While Bitcoin was never designed to have to
deal with arbitrage among multiple SHA256 chains that refuse to
orphan one another, the BSV
blockchain has provided clear evidence that not
all hashing behaviour is directly speculative. The fallacy
that price follows hash is
being exposed, particularly under the scrutiny of regulators who
are becoming more adept at identifying market manipulation in the
space.
Some evidence of this includes the fact
that the largest hashers in the United
States are now publicly traded with stock price being added
to the calculation of total company profitability. Furthermore,
simply being a large consumer of electricity by hashing also
creates profit opportunities in power arbitrage, curtailment
agreements and things like carbon credits, severely muddying the
waters of Bitcoin's basic hashing
economics.
This year has seen 54% of all BTC
blocks mined by just two mining
groups—Foundry USA (29%) and AntPool (25%)—while another 23%
were mined by the third- and fourth-ranked pools. In other words,
more than three-quarters of all BTC blocks can be traced back to
just four mining groups.
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SOURCE Gorilla Pool