Coin Metrics: The Return of Obsolete Miners …

Coin Metrics: The Return of Obsolete Miners to the Bitcoin Network Reduces Its Security

The work of miners is fundamental to the security of the bitcoin network. Entering this space requires a large financial investment in the purchase of equipment. This leads to an increase in the security of the bitcoin network, as miners lock their capital in low-liquid assets and are less motivated to commit malicious actions..

However, the recent rise in the price of bitcoin has allowed some older models to become profitable again, despite the halving, analysts at Coin Metrics note. This aspect is of no small importance for the described security model, since now miners can reduce their initial costs due to higher transaction costs later..

“While there are practical and logistical barriers to joining mining beyond hardware costs, having older hardware allows you to enter the market with significantly less capital,” write Coin Metrics.

Antminer S7 and S9 from the Chinese company Bitmain were at one time the dominant miners in the bitcoin system. Analysts have calculated that the peak in the use of S7 fell on May 2016 – then this model accounted for about 61% of the mined blocks. S9 mined 78% of blocks in May 2018, and now – 32%.

Coin Metrics: The Return of Obsolete Miners ...

According to the company’s observations, the recent rise in the bitcoin rate has led to the fact that a large number of S9 miners began to connect to the network again. Due to constantly changing market conditions, this effect may be short-lived. At the same time, he demonstrates how quickly old models can come back in favorable conditions..

The S9 are sold in the aftermarket for a fraction of their original price. Such miners can be purchased for $ 20 – 80, while at the start they cost $ 3,000. As a result of the onset of the rainy season in China, many miners find the opportunity to make a profit on these devices.

“While the S9’s remaining offline computing power is not even close to being used to launch a 51% attack, the change in network security dynamics brought about by their presence is significant,” the company concludes..

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