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BITCOIN MINER: The rise of Ethereum could help some bitcoin miners

It's getting more difficult to mine bitcoins, but that doesn't mean miners are packing up their servers en masse and seeking greener pastures.

  • Bitcoin mining gets more difficult over time, and so it now takes more electricity and money to mine for the cryptocurrency than ever before.
  • The rise of ether, another cryptocurrency, and the appreciation of bitcoin could help maintain the profitability of bitcoin mining, despite increasing costs and difficulty.

In the early days of the technology, people with a few computers were able to mine hundreds of coins in three to four days. That's not what the landscape looks like today, according to Sebastian Quinn-Watson, a consultant with Blockchain Global, a bitcoin mining firm.

But Quinn-Watson thinks two factors could make up for a spike in cost and difficulty and sustain bitcoin miners moving forward.

"Ironically, the rise of ether is one trend that could help bitcoin miners," he said.

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Ether, the bitcoin rival, which is powered by Ethereum blockchain, is up over 2,000% since last year. Up until June, the cryptocurrencyCoindesk, but its share of the market has since pulled back.

"Many miners without the wherewithal to compete may completely shift over to mining ether tokens," Quinn-Watson said."Less participants means better economies of scale for firms that stay in."

Miners could also benefit from future appreciation in bitcoin's price, according to Quinn-Watson. If bitcoin's appreciation were to outpace the rise in the cost of mining, then the profitability of the business would be unaffected.

To be sure, bitcoin is up about 250% since last year, but it has recently experienced extreme swings in its price. Some miners have attributed this volatility to an ongoing civil war between crypto-power brokers over the future structure of the cryptocurrency.

This, however, doesn't bother Quinn-Watson. He told Business Insider volatility is exciting.

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"It will make the system stronger and drive more growth," he said. "So we welcome the uncertainty and see this as necessary aftershock of the Cambrian explosion that is Blockchain."

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