The price of bitcoin and the market capitalization of the same network has been going through the roof in a previous couple of months. With the graph chart apparently only breaking one record after another, the world is no longer in the dark about the insane potential crypto markets can have. Now, many are considering the potential of their own personal or company investment into the same domain. That means that even more money will likely enter the market before the inevitable pullback of the prices. As this money is converted into digital currency tokens, another issue appears that is a lot less likely to find its presence in the mainstream media.
This is the problem of mining bitcoin and cryptocurrencies in general because all of those tokens need to come from somewhere. Yet, as the buying pressure continues to grow, few are considering where those tokens are coming from and what is the state of their supply. Instead, like with many aspects of the cryptocurrency domain when it comes to the public perception of the same space, people usually ignore the same issue or are completely unaware of it. At the same time, mining pools and even personal mining operations are anything but ignorant of the current state of the crypto market. Instead, it looks like many are getting up to take their mining setups to an even bigger level.
Case of Bitmain
Bitmain is the leading manufacturer of bitcoin mining rigs. This company recently decided to double the prices of its devices. The reason for this is the simple fact that their stock is under a huge strain as many companies around the world try to get their hands on the Bitmain devices. In early December 2020, the company was pre-selling their ASIC mining rigs with a substantial lag time.
Still, it managed to sell three months’ worth of stock in just a couple of weeks. Anyone who bought a mining rig at that time got a message that it should be at their address around May 2021. But, in no time at all, the company sold even more units and got additional orders. Now, there will be no new deliveries before August 2021. There is no need to underline just how successful the company is currently in the mining rig manufacturing domain. Unsurprisingly, the price of individual rigs also got a dramatic boost.
Rising Mining Rig Prices
With a demand that is this high, it is completely expected that any company in a similar situation would decide to jack up its prices. In November 2020, the price of Bitmain’s Antminer S19 is below 1,900 USD. Presently, the same price tag stands at nearly 3,770 USD. That is an increase of almost 100 percent. Apparently, buyers have not been this divided by this decision.
Instead, the mining rigs, including S19 and other models, keep flying off the shelf at the company. Industry experts believe that the situation will not change drastically in the coming months either. In fact, many are certain that this is only the beginning of what is going to be an absolutely spectacular year for cryptocurrency mining operations. Even the more conservative assessments believe that the first half of 2021 is going to be all about mining pools turning out tokens and trying to satisfy the rising demand from many corners of the cryptocurrency market. Any producer of mining rigs will almost certainly drastically increase the price of their models.
As many try and fail to buy new mining rigs, the second-hand market is also wrapping an increasing number of shipments to customers and ramping up its offer. Eager buyers are looking at any available machine, so the secondary mining rig market is also seeing its best results ever since late 2017. Analysts show that used, but more efficient mining rigs have hit their best prices in the last 12 months. Similar to the primary market, this one is also only accelerating its offer and stockpile.
In the coming months, it is more than likely that most resellers of mining rigs will only increase the number of models on offer. The prices too are rising. For example, S9s models had a price tag of only 20 USD in May 2020. Now, the same models in the same condition are being sold for around 130 USD. On Amazon, their price is climbing close to 270 USD on some seller accounts.
It is perfectly clear that one of the main reasons why cryptocurrencies and bitcoin, in particular, experienced the present bull run is the factor of institutional investment. In a previous couple of months, big companies decided to start investing parts of their portfolios into cryptocurrencies. The same has been a long-awaited dream in the crypto community and the last big hurdle towards global and sustainable mainstream adoption.
But, another narrative that is currently developing is that of institutional mining. There are very few actual pieces of data pointing to that possibility, but it is also clear that many companies will come to the same conclusion. Like in esports and so many other facets of the digital environment, a lot of entities are trying to establish fully developed ecosystems. In the case of crypto that would mean that companies that possess budgets and holdings worth billions of USD, will sooner or later consider creating their own mining farms.
After all, it is the progression of a logical sequence. Just like many of them are presently investing money into buying bitcoin tokens and holding them, others will decide to set up their own mining operations. The fact that many of them are already working in the tech domain and are no strangers to things like server farms will make that decision only more feasible. If that occurs on any major level, the issue of the supply of tokens will be resolved, at least in the near term. Furthermore, such a decision would likely kick-start an entirely new chapter of the mining rig manufacturing industry, as it too scrambles to keep up with their even more rising demand.