On the 17th, when the cryptocurrency 'Bitcoin' price surpassed $50,000 for the first time in history, the Bitcoin price was displayed on a large electronic board set up at the Upbit Lounge in Gangnam-gu, Seoul. Photo by Jinhyung Kang aymsdream@
[Asia Economy Reporter Choi Eun-young] "Greetings from Chaerini (a child who has just entered the mining field)."
Recently, an unexpected 'mining' craze has been sweeping online. Mining does not mean digging for actual minerals but refers to running specific computational programs on a computer 24/7 to earn virtual currency. By solving complex cryptographic problems with a computer, one can earn virtual currency, and this process was named mining because it resembles digging for gold in a mine.
On the 19th (local time), according to CoinMarketCap, a U.S. virtual asset (cryptocurrency) market tracking site, Bitcoin, a representative virtual currency, surpassed its all-time high of $56,000. This is a record high. According to foreign media such as CNBC, Bitcoin's market capitalization exceeded $1 trillion for the first time in 12 years since its debut in 2009.
Bitcoin has been on a steady rise since early this month when electric vehicle company Tesla purchased $1.5 billion worth of Bitcoin. Individual investors, known as "ants," quickly moved following Tesla CEO Elon Musk's statement that Bitcoin would be accepted as a payment method for their products. Major altcoins such as Ethereum and EOS have also shown upward trends.
Along with this, the mining craze has intensified. Cryptocurrency mining-related companies have recorded continuous stock price increases. Riot Blockchain, a Bitcoin mining company listed on Nasdaq, saw its stock price surge 210.4% this month. Marathon Patent, the largest cryptocurrency mining company in North America, also jumped 97.6% during the same period.
Individual investors are no exception. On online communities, dozens of posts claiming to be "Chaerini" appear daily, asking for information needed for mining.
Due to the impact of the COVID-19 recession, inquiries about cryptocurrency mining have sharply increased recently in PC room owner communities. Photo by Online Community Capture
In particular, PC room owners struggling with business due to COVID-19 have joined in. The idea is to mine rather than let computers sit idle. Although electricity costs are a burden, PC rooms have separate electricity rates applied, so the electricity cost burden is less than that of households. The heat generated by PCs during mining even helps save heating costs in winter. In fact, various PC room owner communities have seen a steady stream of inquiries about converting to mining farms.
Eventually, graphics cards, which are essential for cryptocurrency mining, have become highly sought-after "precious items." The Nvidia RTX 30 series, most commonly used for cryptocurrency mining, has increased by 105-145% compared to its launch price. Due to overwhelming popularity, graphics card manufacturer Nvidia plans to release a cryptocurrency mining-specific graphics card in March and has also introduced measures to reduce mining performance on general graphics cards.
The question is how long the Bitcoin uptrend will continue. Some have focused on the recent aggressive investments in the mining market by the United States. There is hope that after the price volatility caused by China's policies, cryptocurrency prices might stabilize somewhat.
Experts analyze that the mining craze has intensified as U.S. companies have recently entered the mining market one after another. According to The Wall Street Journal (WSJ), U.S. blockchain startup Core Scientific has transformed a jeans factory in North Carolina and a carpet factory in Georgia into mining farms over the past two years. The U.S., which had been blocked by China's dominance in the mining industry, has ignited competition with aggressive investments.
Until now, China has led the mining market. China has held a global advantage in Bitcoin mining by leveraging cheap electricity costs but banned cryptocurrency trading at the government level in 2017, making it illegal. This represents a "political risk." In contrast, the U.S. is free from financial regulations.
However, there are also skeptical views on the future of cryptocurrency and the mining craze. Especially, the critical stance of global financial authorities could be a significant variable.
At a Senate confirmation hearing last month, the U.S. Treasury Secretary stated, "Many cryptocurrencies are thought to be primarily used for illegal finance." The Indian government announced on the 31st of last month that it would push legislation to ban private cryptocurrency circulation.
Experts unanimously advised, "One should refrain from joining the mining craze just because of the temptation to make easy money."
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