Cooling bitcoin craze sees SA miners back off and chill out
Heat comes off demand for cryptocurrency processors
Following the selloff of bitcoin and other digital coins, demand for cryptocurrency mining equipment has tapered off in South Africa, sales data suggest.
“I can confirm that all mining product sales are under pressure – sales volumes are less than 50% from the previous month,” says Mustek CEO David Kan.
Mustek, an assembler and distributor of information technology products, said in February it was struggling to keep abreast of strong demand for cryptocurrency mining equipment in SA.
It had seen a “phenomenal rise” in graphics processing unit (GPU) sales owing to “intense interest in cryptocurrency mining by the public”.Cryptocurrency mining refers to the process whereby transactions are added to the public ledger, and the method by which new bitcoins and other digital currencies are released into the market.
“Two weeks ago we got an allocation of 500 GPUs [from a supplier]. Within 20 minutes, all 500 were sold. The demand is certainly there,” Kan said in late February.
But with the cryptocurrency bubble having burst at the end of 2017 and early 2018, reduced prices appear to be weighing on demand.
The price of bitcoin has fallen from R254,670 in mid-December to about R100,000 at the end of last week, according to data from local exchange Luno.
That will do little to promote large-scale cryptocurrency mining in SA, which is a highly energy-intensive process. Commercial mining has not taken off here.Lex van Wyk, CEO of data centre operator Teraco, said the costs to mine bitcoin had grown, and mining in SA was less viable than in places such as Tibet and Iceland.
“In these places, electricity is extremely cheap, and you don’t really need cooling because you just open the windows. It’s all about getting the lowest cost.”
It was unlikely that any of Teraco’s customers were mining bitcoins within the company’s data centres, said Van Wyk.
The Washington Post reported in February that Iceland’s cryptocurrency mining industry had started using more electricity than Icelanders’ own private energy consumption.
Companies had inundated Iceland with requests to open new data centres to mine cryptocurrencies and this was adding pressure on the national electricity grid, the newspaper reported.