Bitcoin enters the "death spiral"! What do you think of the currency circle?

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Bitcoin enters the "death spiral"! What do you think of the currency circle?

2018-12-29 18:33:19 16 ℃

The winter of 2018 is the winter of the virtual digital currency bubble, even if it is the "coin king" bitcoin, it is not immune.

The non-small market shows that bitcoin has fallen 43.99% in the past three months. After a recent plunge, at 14:5 on December 24, the unit price of Bitcoin rebounded to $4,201. In just a few days, Bitcoin fell more than 10%. As of 14:50 on December 28, Bitcoin closed at $3,580. The entire bitcoin seems to be caught in a "death spiral."

Data Map (Source: Visual China)

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Bitcoin enters the "Death Spiral"

On December 3rd, Atulya Sarin, a professor of finance at Santa Clara University, published an article about the difficulty of mining. The paper, he believes, the recent decline in the difficulty of mining indicates that the bitcoin market has entered the "death spiral" stage.

What is the "death spiral"? It is the decline in bitcoin price that will lead to the loss of miners. The decline in computing power caused by the loss of miners will make the bitcoin network mining difficulty down, and the difficulty of mining will reduce the cost of mining. Finally, the cost of mining will decrease. The price has ushered in a new round of decline.

In layman's terms, for example, 10 people were mining, because the benefits were reduced, 5 people did not dig, and the remaining 5 people continued to dig. Because the rewards for each block of the Bitcoin network remain the same, five people dig as much as they can dig into the original double. Mining unions that dig more bitcoins sell off, which will further increase market supply and lower bitcoin prices.

According to btc.com website statistics, starting from November 2, Bitcoin network has been significantly reduced network mining three times (November 17, December 3, December 19) Difficulty, the overall decline was 32.8%. It was during this period that bitcoin prices fell in successive waterfalls. From $6,419 on November 14, to $3,201 on December 16, the highest drop was 50%. Looking at the well-documented history, the difficulty of this three consecutive major reductions has been traced back to 2011.

Because of the price drop, the miners withdrew, the bitcoin network's computing power and difficulty fell, and the calculation and difficulty fell, the consensus reduced, further aggravating the decline in the currency price. This "death spiral" is actually happening in the recent bitcoin price.

Source: screenshot of btc.com page

Let's go on like this, the miners have to finish?

In fact, the "death spiral" is not only reflected in the price of bitcoin, but also in the recent currency circle and mining circle.

The previous daily economic news () reported that the world's second-largest mining giant Jia Nan Zhizhi launched the ace model A851 in July this year, priced at 2,900 yuan, buy three get one free in November, At the beginning of December, it will drop directly to 1,050 yuan, which is equivalent to another 50% discount. The world's largest mining giant, Bittland, compared with the beginning of the year, a number of models are less than a fold sale, the lowest sale price is only 300 yuan.

In addition to the sale of mining machines, recently, a number of media reports, the former miners of the giants of the mainland, are laying off workers on a large scale. According to the report, on December 22nd, the number of employees certified as “Beijing Bit Continental Technology Company” posted on the workplace social platform, saying that Bitland will lay off employees on December 24. As for the layoffs, Dovey Wan, the former managing director of Danhua Capital, quoted Ethereum World News as a report titled “Bitland or Painfulness” and said that the layoffs in Bitland may be as high as 50%.

On December 24th, Bitcoin officially responded to the layoffs in Beijing. "There is no rumor about the outside world. It is based on the development of the business in the mainland and the normal personnel adjustment at the end of the year. We will continue to welcome you in the future. Joining talents from all walks of life."

Even if it has responded, but with the departure of a large number of bitcoin miners, the market demand for mining machines has dropped sharply. Layoffs for survival, or continue to operate at their original size, is clearly a topic that does not require debate.

Data Map (Source: Visual China)

The company where Mr. Zhang is located is professionally dug The mining company, the daily economic news () reporter contacted Mr. Zhang. Mr. Zhang said, "We have run 2,000 machines now, 70% of the machines have been shut down, and we have opened a machine that digs large coins." As for Bitcoin, Mr. Zhang told, "The lowest machine for digging BTC now, It is Avalon's A921 and A851. Our S9 was sold early, and now it seems to be a machine with more than 20T, and it can run."

Mr. Zhang revealed that when the price of the currency was high, Zhang Mr. Company "has millions of electricity bills a month, and now it is hundreds of thousands a month." Even though the current use of ultra-low electricity bill of 0.45 yuan / kw, but Mr. Zhang still lamented, "electricity is expensive, ready to change places" "If the price continues this way, all miners have to die."

Edit | Zhao YunInternship Editor| Yi Qijiang

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