While we are only 16 days into the new year, based on what we’ve seen so far – its looking pretty likely that 2015 will be Bitcoin’s worst year yet.
Since the start of 2015, the currency has been a shadow of its former self, with Bitcoin beginning the year at just over the $310 mark (£206) – a massive drop from December 2013’s giddy $1200 (£715) high.
Yet sadly for those investing in the cryptocurrency, the worst was yet to come.
Yesterday evening, the market saw a dramatic crash, with the ailing cryptocurrency losing a shocking 40% of its value, dropping below $200 (£131) per coin for the first time since 2013.
Yet if we’re honest – this didn’t come as a total surprise. For many, alarm bells started ringing on the fourth of January, when the leading UK Bitcoin exchange BitStamp was savagely hacked, resulting in the site shutting down completely until only a few days ago. But with companies like Microsoft and even Yahoo backing Bitcoin, is all hope really lost for the currency?
Well, its certainly not looking great.
Earlier this week, Bitcoin exchange CEX.IO announced that it would temporarily cease its cloud mining service. Why? Because according to the company, the cost of mining has started to exceed profits.
Confused? Let us explain. Bitcoin mining works in what are known as ‘pools’, these are large groups of miners who assign their computers the task of finding special numbers which correspond to bitcoins. Mining is a costly process, as it requires a large amount of electricity, and as there are only a finite number of Bitcoins, each yield is becoming sparser and sparser.
As Bitcoin’s value is tied to how difficult it is to produce, it looks like the wonder-tipped crypto currency could finally be reaching its tipping point.
Amadeo Pellicce co-founder of UK-based Bitcoin exchange Coinfloor cited the problem being that there was “more supply than demand”. With miners starting to panic at their rising costs, he attributed the sudden influx of coins on the market as the result of large sell-offs by mining companies and other bitcoin holders.