Bitcoin mining has been in an all-time low for the past couple of years, with the average price falling from more than $1,400 per Bitcoin on January 1, 2018 to just over $750 per Bitcoin today.
That’s the lowest Bitcoin price in over three years.
And while there are still several companies that are still competing with each other for a slice of the market, there are also several that are starting to look a lot more like one another.
One of those companies is Bitcoin Mining Industry Consultants (BMCI), an Austin-based consulting firm that helps Bitcoin mining companies and investors get their finances in order.
“Our industry is still in the early stages, and we’re still in a period of consolidation,” says Rob Schulz, a founder of BMCI and one of its partners.
“There are some big players out there that are coming out with new products and services, and the incumbents are starting in a more competitive position, and that’s why we’re seeing consolidation in our industry.”
The current Bitcoin price is around $1.7 million, according to CoinDesk’s Bitcoin Price Index, but the median price for Bitcoin mining equipment on the Bitcointalk forums is $1 million.
In an effort to keep costs down, many mining companies have started using hardware from third-party vendors.
The most recent Bitcoin price peak occurred on January 12, when the average cost of a Bitcoin mining unit hit $1m, according an analysis from CoinDesk.
But even after the Bitcoin price crash, the Bitcoin mining market has been growing rapidly.
Last month, Bitmain’s Bitcoin mining hardware was selling for $2.5m, and in June, one of the biggest Bitcoin mining manufacturers, BitFury, announced it was bringing back its “premium” model.
While Bitcoin mining is still an extremely expensive hobby, Schulz thinks the market is now well-positioned for a long-term decline in prices.
“The Bitcoin mining sector is really in the beginning stages, but it’s been growing steadily for quite a while,” he says.
“It’s definitely an industry that will be here for a while.”
Bitcoin mining and hardware companies in general are trying to compete with one another by offering new products to consumers.
A lot of the companies that compete with each others have tried to sell their own mining equipment to consumers, but Bitcoin mining remains a niche market.
“A lot of Bitcoin mining businesses have started to sell hardware directly to consumers,” says Schulz.
“We’re definitely in a market where we’re getting better and better at making products for consumers.
It’s an interesting market.
We’ll see what happens.”
In the next few years, the prices of Bitcoin and other cryptocurrencies will likely start to drop again, which could put pressure on Bitcoin mining, and ultimately the entire mining industry.
“Bitcoin is going to go up again in a year, and it’s going to be like a bubble,” Schulz says.
As the market for Bitcoin continues to expand, it’s likely that Bitcoin mining will continue to be a profitable activity for some time to come.