The Effect On ASIC Miner Value From Cryptocurrency Price & Network Difficulty

in goldshell •  2 years ago 

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The reward for proof of work (POW) mining, a cryptographic proof in which one party proves to the other that a certain amount of a specific https://asicminercompare.com/miners/goldshell/kd6/ computational effort has been expended, is a “block reward”. For Bitcoin miners, the revenue generated by their operation is simply the number of Bitcoin rewarded multiplied by the current Bitcoin price.

Bitcoin’s protocol includes a unique network difficulty adjustment that ensures that a block is rewarded roughly every 10 minutes. As a result, as mining becomes more profitable, market forces will attract more hash power into the system and the Bitcoin protocol will systematically adjust the difficulty level in earning a block reward higher. Thus, making an ASIC miner's performance a strong influence on the current market price of the machine.

Network difficulty exerts downward pressure on the value of ASIC miners. The market participant evaluating the value of a miner at any given time will need to make an assessment of the current and future growth in network difficulty in order to make a reasonable assumption on the value of the machine today.

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