Reality is setting in for organizations within the block reward mining industry as many now find those lucrative days from effortlessly mining and selling BTC appears to be over. The latest recipient of this cold hard truth is the publicly traded company Argo Blockchain.
Less than 60 days after reporting strong 2019 earnings that saw revenue rise 11-fold from the year before, the firm reported monthly mining margins dropped 5% in May after it earned 67 fewer BTC than the month before for supporting the network.
U.K.-based Agro reported that the decrease is directly attributable to the May BTC halving, which saw the block reward subsidy from 12.5 to 6.25 BTC.
Miners’ capitulation cycle
Argo, which listed on the London Stock Exchange (LSE) under the ARB symbol, held 117 BTC at the month-end. It operates 8,000 ASIC mining machines at 730 Ph/s. Company CEO Peter Wall is betting the company’s long-term solvency on rivals exiting the market and improvements in Argo’s mining margins once the BTC mining difficulty mechanism decreases.
In a statement, Wall said: “This week will see another BTC mining difficulty adjustment, and we expect a further drop of between 4-6% in difficulty based on current hashrate and projections.”
New normal for BTC
Argo’s share price remained relatively unchanged on the LSE as BTC continues struggling to stay above the $10,000 price barrier. The reality is the only viable pathway to achieve the goal of returning to 2019’s earning level is for Argo to monopolize the block reward mining sector. Argo hasn’t announced plans to reduce operating costs or diversify its business model. It expects their “state-of-the-art” mining rigs will shield them from hardship.
The BTC community will experience an unpleasant surprise one day once they awaken to the fact that decentralized mining no longer exists on the BTC blockchain. Even this course might not be enough to forestall a decline in Argo’s revenue.
China-based competitors have a big advantage because of their proximity to hardware suppliers, access to cheaper power sources, and state-sponsored grants and programs. A decrease in mining difficulty historically has also been accompanied by a rapid selloff by traders and a fall in the digital currency’s price.
The variety of challenges block reward miners like Argo now grapple with are systemic to the sector built on currency manipulation and purposelessness. One of the greatest negative externalities of the 2019 earnings reports, is that some investors tend to assume that block reward miners can build a profitable business on a useless blockchain, and the digital currency traders will continue to reward them by artificially inflating its value.
One of the starkest revelations of BTC’s stagnant market value is the sustained lack of mainstream consumer adoption. Even during times of global economic turmoil, it only highlights BTC’s complete lack of demand and utility. No FOMO paved road to immense profitably has magically appeared as was promised by BTC’s so-called “experts.”
Editor’s note: This article has been updated.
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