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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