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The Business of Bitcoin Mining Going Two Ways

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Bitcoin mining has become an important facet of the cryptocurrency ecosystem, but it has also become a big part of the business of Bitcoin. Mining for the cryptocurrency can be a pretty profitable endeavour, and as such, has seen major mining companies and pools spring up in recent times. 

As a business, Bitcoin mining allows companies to create wealth through Bitcoin by chasing cheap and often renewable electricity, as such, when the coin is higher in worth mining can be extremely profitable. But, as has been seen through 2018, when the price of the coin dips down, profitability can be quickly wiped out.

This see-saw action has been tough for some companies to ride, but there is also evidence of others who are doing a good job of increasing their business in the mining sector. For one, Bitmain broke through as a major player in the mining space, but recent setbacks have led the company into a dark period.

But, at a similar time, Publicly-listed mining company Argo Blockchain has seen a tenfold increase in revenue for 2019 over the previous year. So, it appears that the business of Bitcoin mining is not as straightforward as many find. 

Bitmain’s beleaguered present

When Bitcoin was rallying through 2017, and even prior to that, Bitmain was the only real name in Bitcoin mining with its ASIC chipsets and its huge control over a lot of the Bitcoin mining hash rate. 

Even more so, the company looked to be going for a big play in going public with an IPO. However, that never materialised and in March of 2019, the application officially lapsed leaving a lot of egg on the mining giant’s face. However, that was not the end of the IPO drive as in November last year they tried to discreetly get another IPO going just as cracks started showing in the business. 

Infighting and staff layoffs from Bitmain have caused a lot of people to lose faith in the mining business. The staff was cut by 50 percent not too long ago, and co-founder Ketuan “Micree” Zhan was also stripped of his director role at the company. 

In fact, Bitmain has even been listed on The Information’s list of troubled tech companies.

On the other hand

It is interesting to note that it is not the business of mining that is the problem, rather how the businesses are being run as Argo looks to be shining. The London Stock Exchange-listed company, that focuses on green energy for its mining operations, is hitting all the right chords and looks to be achieving good gain and further expansion into this year. 

In a trading update, the firm reports that it expects revenues for 2019 to be £8.5 million ($11 million), a more than tenfold increase from 2018’s £760,000 ($987,000) figure, despite a significant slowdown in the last quarter of the year as markets cooled off.

Darryn Pollock
Darryn has been interested in the blockchain and cryptocurrency space since he heard about Bitcoin in 2015. He then decided to use his journalism degree to report on this fascinating fintech space in 2016, and has not looked back since.

Nugget’s News: Crypto Market Update 20th Jan

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