Hundreds of thousands of “buffalo plow” rigs are shelved in warehouses for preservation when mining virtual money is no longer profitable.
In contrast to the situation in 2021, when both diggers and sellers of buffalo plows are in short supply. Cryptocurrency miners are aggressively hunting for hardware and video cards while manufacturers fail to meet orders.
Currently, the situation is completely opposite, hundreds of thousands of “buffalo-plowing” rigs – modern computer systems invested to serve virtual currency mining are being shelved in a new warehouse.
The US market alone is estimated to have about 250,000-500,000 rigs of virtual currency mining buffaloes that still have their seals, full labels like new, but are carefully packed and thrown in the warehouse. Matt Schultz, president of Bitcoin mining company CleanSpark shared.
Ethan Vera, director of the virtual currency mining company Luxor Technologies, said that if calculated on a worldwide scale, the number of idle plows is nearly 300,000.
The huge numbers speak for the current situation: cryptocurrency mining is no longer profitable for business owners and investors.
The virtual currency industry is estimated to have evaporated more than half of its market capitalization as the price of Bitcoin and many other virtual currencies has dropped significantly in recent times. Meanwhile, the price of energy such as electricity, gasoline, and oil is increasing, making the operating costs of buffalo plow machines more expensive than ever.
Therefore, virtual currency mining is considered to be no longer profitable because operating and mining costs increase while profits decrease.
Another minor reason was also raised, that is, there is no place to put the mining rigs.
After China officially banned cryptocurrency mining, a series of miners have moved to work in countries that still allow this work. That’s why the need to find space to place giant plowing rigs is increasing, business owners renting land, although the price has increased, the fever does not stop.
Core Scientific, the largest virtual currency mining company on the planet, has increased the rental price of the space to operate the buffalo rigs by 20-25% in the past few months. This company combines self-mining and leasing space for outsiders to place their rigs.
Alex Martini, CEO of Blockfusion, said:
“We can lease an additional 32 megawatts of capacity, and many places can even lease up to 400 megawatts. But now it doesn’t make much sense because cryptocurrency miners are no longer interested in the profession.”
Although the virtual currency has cooled down and the supply is many times greater than the demand, hardware manufacturers still build newer, more modern but cheaper rigs to attract buyers. This is also partly due to the fact that order arrangements between miners and hardware manufacturers are often in large batches over long periods of time, with small returns. Miners will have to pay the deposit in advance and pay more for each batch of goods.
According to the contract, the price of the rigs plow virtual money can go up and down depending on the market situation, the two parties will consider and come up with the final price.
Professional mining companies like CleanSpark, Core Scientific, and Marathon all apply this provision to keep the price of rigs as low as possible. They do not disclose what percentage of the discount.
Bitmain, one of the world’s largest manufacturers of hardware for buffalo plows, said that they are offering a discount of up to 30% for large customers or have ordered their previous orders.
“If the virtual currency depreciates, we will be forced to reduce the price of the mining rigs according to the previously signed contract, depending on how the market moves.” Xmei Lin, Head of Marketing said.
New virtual currency mining rigs are considered not to depreciate as much as used ones, so neither the manufacturer nor the miners who buy a new machine will never unbox it immediately. They still shelved them in the warehouse waiting for a virtual currency to “revive” in the future.
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