The scene appears dire: a pathetic pile of unwanted metal, fans, and circuit boards, discarded on a nondescript city street, somewhere in China. The scattered scrap heap consists of ASIC miners — machines that once cost thousands of dollars, built specifically and exclusively for the purpose of mining Bitcoin.
And now? All worthless garbage.
It’s a pretty dramatic punctuation on a market collapse that has left few unscathed in the cryptocurrency industry. Yet, these pictures do not tell the whole story.
In fact, they tell a very particular story that isn’t necessarily 100% truthful and is, in fact, quite likely designed to be deliberately misleading.
It turns out, most of these images of discarded ASICs are of much older models that simply cannot compete with newer, more efficient tech. It is standard procedure to discard expired miners, sold for scrap metal in bulk, much like it would be unsurprising to find a pile of discarded older-gen iPhones being sold for tiny bits of gold, copper, and other precious metals. It just so happens that a photo of discarded ASICs (likely replaced at some point in time with better equipment), an image that would have been ignored when things were going well, now paints an even more dismal picture, adding to feelings of fear, uncertainty, and doubt.
To be fair, hash rates for Bitcoin have dropped considerably over the past week as more miners are indeed being taken offline due to a lack of profitability. The F2Pool founder, Mao Shixing, explains that more than 600,000 miners have been taken offline over the last couple weeks due to a lack of profitability. The price of Bitcoin is most certainly the key factor here. However, electricity costs can fluctuate and cut down on profitability as well, especially when seasons change and fossil fuel costs increase in wintry conditions. For the newer, more efficient ASIC models, this current situation is a temporary halt to their work assignment — not necessarily a date with destiny at the local scrapyard.
And these suboptimal conditions will change. The Bitcoin protocol is designed to adjust automatically for drops in hash rate to maintain security and integrity, and will therefore become easier to mine at the next automatic change to hashing difficulty. In a matter of ten or so days, these same machines might move back into profitability as hashing becomes less costly again due to lower mining costs with lessening difficulty.
Of course, that’s not to say that the market isn’t in a depressingly bearish state that could persist for some time. If prices plummet further, more inefficient miners may continue to go offline, but things will, again, eventually find an equilibrium. The mining integrity of Bitcoin’s network will continue to adjust automatically and should, in the long run, balance out difficulty with profitability.
An important issue remains with these misleading images of ASIC abandonment. One must wonder, who is motivated to promote such a worrisome scenario? What is the benefit to presenting images that cause even more fear and desperation in a time of panic-selling and regret?
Remember this: For every panicked seller desperately trying to get rid of their devaluing asset, there is a buyer who feels this is the right time to accumulate the very same asset.