- According to David Marcus, CEO of Lightspark, a Bitcoin-focused company, the crypto is showing no signs of warming up.
- The direct Bitcoin/Crypto price affects the hash rate of its mining process. The higher the value, the higher the hash rate.
- 2023, many should have a strong mindset and will to endure as the crypto winter will prolong.
As we embark into the unknown as the year starts, many crypto traders and Bitcoin miners ask; will the crypto winter finally end? The long-standing crypto winter is the most plaguing factor that those within the crypto industry have endured. The inconsistent crypto volatility has left millions in pure awe and fear. With the last ear having one of the most significant drops in crypto history, many cannot help but wonder if 2023 holds something different. For those new, crypto volatility measures how much a digital asset or Bitcoin, has moved over time. It is essentially the mechanism that grants digital assets like Ethereum and Shiba Inu the chance at hitting millions in value, but it’s also doing.
The year ended with Bitcoin at an all-time low of below $17000, and most of the crypto market is now confused. Do they persevere, endure the crypto winter, sell the bacon, and realize the crypto industry is falling apart? Whether the crypto market survives or not is merely speculation. The only fact we wish to share is that all crypto miners traders should gear up for another cold season in the crypto industry.
Crypto Winter prolongs its stay.
Many crypto miners and traders enter 2023 with mixed feelings about the crypto industry. After the millions stolen from various crypto organizations to FTX crumbling beneath its feet, the crypto winter only appears to grow stronger.
According to David Marcus, CEO of Lightspark, a Bitcoin-focused company, the crypto is showing no signs of warming up. Ina medium blog post, Marcus predicted that the crypto industry in 2023 may not be what we hoped for.
In his blog, he noted the various demerits surrounding the crypto market. He bluntly stated that 2022 fully displayed the horror of crypto to every user.
A $32 billion cryptocurrency exchange, once renowned for having the potential to rule the crypto market crashed in on itself. Various crypto exchanges have gone bankrupt due to crypto hacks, and millions of dollars in crypto coins have gone missing.According to Marcus, 2023 will be an even more challenging year t make up for the losses of 2022. According to his blog, the crypto winter will continue in 2023 and most like not in 2924. Establishing the current gaps within the crypto market made from the abuse of unscrupulous players may take years. Bitcoin suffered one of the most negative hits since its debut in 2019. What was once valued a $68000 is now slightly above the $16500 mark. This fact is detrimental since Bitcoin serves as the centre of the entire crypto market.
In some cases, when its value drops, so do numerous altcoins. This drop rendered various cryptocurrencies obsolete, and many had to shut down. The crypto winter was already hard, but the FTX collapse gave it a new cumbersome definition.
Crypt miners receive the harsh reality of the crypto winter
Many claims that crypto traders have suffered the most throughout this crypto winter. However, this statement needs to be more accurate. As much as the crypto winter has crippled various crypto traders, it has affected their counterparts, crypto traders, and much more.
In 2022 various Bitcoin mining companies struggled to maintain their position due to the crypto inter. Mining bitcoin became less profitable as hash rates gradually slowed as Bitcoins prices continued to sink. This marked doom for all crypto miners, both individuals cooperating—Bitcoin miners by energy to mine BTC block rewards. When the Bitcoin price is high, miners’ high-profit margin offsets energy expenditure.
The process of crypto mining is a survival-of-the-fittest selection event. Many crypto miners struggle for a single block, and the one with the highest processing power becomes the victor. With the ongoing crypto winter, the prices have essentially lost their balance. Mining bitcoin or any other altcoins requires energy and with low prices purchasing that energy becomes a burden. As a result, the hash rate plummets along with the Bitcoin Prices.
Because the procedure functions on the PoW mechanism, network mining difficulties are yet to be simplified. The high energy consumption and the gradual growth of crypto enthusiasts co-related at some point.
As such, crypto mining companies did not profit from the actual mining of bitcoin. Instead, they acquire their profits by facilitating the mining of bitcoin. Crypto mines often need more equipment to start efficiently mining crypto. Instead, they rent the facilities from crypto mining facilities and are in charge of the details and infrastructure.
What happens when the output from the bitcoin price is lower than the amount paid for renting the facilities? This generates a loss to the crypto miners, who, in turn, either hold their process or give up. Because Bitcoin/ crypto mining companies earn directly from the crypto miner, it poses a substantial financial risk.
The steady crypto winter has generated an imbalance between the profit gained and the amount spent.
So what now?
The crypto winter is ongoing, and its momentum is not slowing down. The demands of crypto miners and traders heavily strain the crypto market. In theory, crypto mining companies and individuals can mine when it’s profitable and not when it generates a loss. Unfortunately, from a practical standpoint is impossible.
The sudden shutdown of crypto miners will have disastrous repercussions. As a result, crypto miners may resort to a form of treasury management strategy. This will enable crypto miners to hold mined Bitcoins. A similar strategy crypto trading uses. This strategy will require some use of the held bitcoin to fund operations but at a moderate rate, allowing individuals and companies not to expend as much energy as they require.
The cruel fact is that the crypto winter will see several more crypto exchange platforms crumble. The survival-for-the-fittest is a cruel concept that works best within the crypto market. Due to the severe maturity of the crypto winter, having a unique strategy is a must—from now on, without set strategies to cushion oneself in the event of a sudden drop in crypto volatility.
So for 2023, many should have a strong mindset and will to endure, and in the end, only true crypto enthusiasts will remain. As Bitcoin price continues to drop, many should gear up and prepare themselves for any more factors it throws at us.