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January 8, 2016updated 31 Aug 2016 10:42am

Miners look to earn bitcoin as price rises again

News: Price boost is prompting a resurgence in bitcoin mining.

By Charlotte Henry

The increasing value of Bitcoin is fuelling a resurgence in the mining process that creates them.

Bitcoin is highly volatile and it therefore can be seen as risky for people to invest in computing equipment to produce new bitcoin, particularly as the process is designed to get periodically more difficult in order to limit the amount of total bitcoin that can ever be created.

Its price soared to $1,137 a bitcoin in 2013, having been just $13 a couple of years earlier. It has then spiralled down to $183 a bitcoin during 2015. That plunge made it viable for only those with major resources, or those who shared resources in what are called mining pools (whereby people combine computing power), to continue with the endeavour take on the high electricity costs it can incur.

Today a bitcoin is worth about $456, and this significant rise in price has prompted a return to mining from a wider range of sources, people in the industry have told Bloomberg.

Genesis Mining, which offers mining computer power for sale, says the rise can fuel a significant upturn in demand for those wanting get involved in the digital goldrush.

CEO Marco Streng said: "In a price-rising scenario, you can see demand that’s tripling, and sometimes even higher."

Bobby Lee, CEO of Shanghai based bitcoin exchange and major mining pool BTCC said: "For people who already bought equipment, their ROI will increase." No wonder the amount of computer power connected to his firm’s pool has doubled in the past six months.

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Lee added that "everyone in our pool is making money, because people who aren’t making money would not have their machines turned on." He believes that the increase in demand will drive innovation amongst mining equipment makers.

Bitcoin, and its associated blockchain technology, is also gaining more public acceptance. Major management consultancy firm Accenture announced yesterday that it had brought blockchain firm Crodaura into its FinTech Innovation Lab class of 2016.

Blockchain startup Gem closed a Series A funding round worth $7.1m earlier this week, while on the Isle of Man the government has created a regulatory system around bitcoin, and is actively encouraging bitcoin and blockchain firms to come and set up on the Island.

Various large financial institutions are known to be investing in the technology too. Research put out in late 2015 by Magister Advisors said that over the coming 1 to 2 years the top 100 global financial institutions will invest $1bn in blockchain technology.

The research also found that Bitcoin itself was set to become the world’s sixth largest reserve currency by 2030.

That’s not to say it is all positive for those operating in the world of cryptocurrency. In the wake of the Paris terror atrocities in November the EU began planning a major a crackdown of non-banking payment methods, including Bitcoin.

It seems clear though that at this moment in time those actively engaged in mining at this moment are well on their way to making a profit.

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