Bitcoin Price Drop: CEX.io Plans Mining Pause
The Ghash.io mining pool operated by CEX.io currently holds approximately 11% of the total mining power of the Bitcoin network. However, this may change as the company has announced plans to temporarily suspend its mining operations due to the declining Bitcoin price during the next difficulty adjustment.
CEX.io, a Bitcoin mining service and operator, has decided to halt its cloud mining activities due to the simultaneous effects of falling Bitcoin prices and rising network difficulty. This decision follows a significant increase in Bitcoin difficulty by 8.2% during the last adjustment. The Bitcoin price has continued to drop, currently trading below $300.
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"The measure is temporary, provided that the Bitcoin price rises in the future or the network difficulty decreases sufficiently," stated Jeffrey Smith, CEO of CEX.io.
According to blockchain.info, CEX.io accounts for about 11% of the total hash rate of the Bitcoin network. This change could lead to a noticeable alteration in the next Bitcoin difficulty level and may also delay transaction confirmations, which theoretically occur every 10 minutes but can vary based on the addition or removal of hash power in the network.
As the Bitcoin price has fallen below the psychologically significant mark of $300, Bitcoin mining is becoming increasingly unprofitable, especially for older ASICs that are not as efficient as the latest technologies. Cloud mining providers must cover electricity and maintenance costs, which are typically incurred in US dollars or other local fiat currencies, while mining revenues are generated in Bitcoins. With the declining value of Bitcoin against the US dollar, mining is becoming less profitable, potentially leading to complete unprofitability.
This measure does not affect CEX.io's other activities in the cryptocurrency sector, particularly its cryptocurrency and fiat trading platform. CEX is reportedly also seeking partnerships or other opportunities to modernize its mining facilities to deploy more energy-efficient hardware and thus increase profitability.
At the end of last year, the difficulty of the Bitcoin network decreased for the first time in nearly two years, twice in a row. However, it has now begun to rise again. A significant reduction in available hash power in the Bitcoin network could delay transactions on the Bitcoin blockchain, as the difficulty is adjusted based on available historical data.
While there have been no major drops in Bitcoin difficulty that have seriously impacted transaction confirmations in the past, such an event has occurred in the altcoin scene, and the consequences are typically severe: trading with coins on exchanges becomes more difficult, and transactions requiring confirmation slow down. Merchants accepting Bitcoin should not be affected, as payment processors like BitPay allow payments without confirmation.
Key Takeaways:
- CEX.io holds 11% of Bitcoin's total mining power.
- Mining operations are temporarily suspended due to falling Bitcoin prices and rising difficulty.
- Bitcoin price currently below $300 is making mining increasingly unprofitable.
- Potential delays in transaction confirmations may occur due to reduced hash power.
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