Bitcoin Mining's New Bidding War

As bitcoin's price edges up, secondhand mining equipment is becoming more profitable to run.

The cost of secondhand cryptocurrency mining equipment in China has nearly doubled in recent weeks as a result of bitcoin's price jump over the same period.

Some mining equipment wholesalers have even told Samani that some models were sold out.

TokenInsight's Zhong echoed that sentiment, adding it's usually the mining equipment wholesalers and secondhand equipment market-makers that are stockpiling gear.

Mining farm operators in China's southwestern region previously estimated there will be over 1 million machines running in the area during the summer, and that this could push the hash power of the bitcoin network as a high as 70 quintillion hashes per second.

Chris Zhu, co-founder of Poolin, a China-based crypto mining pool, said another driver of the increasing demand for secondhand equipment is new capital from newcomers.

"There's a large amount new capital weighing in this year, who didn't experience mining cryptocurrencies in a water season in a bearish market," he added.

One new entrant is a $44.5 million mining fund raised by the Shanghai-based blockchain investment firm Fundamental Labs, which is betting on both equipment and mining farm operations ahead of the summer season.

Fundamental Labs' Yuan agreed, saying there's a limited supply of new cryptocurrency mining equipment from manufacturers.

"Mining farm operators may have overestimated the attractiveness of the water season, so the total supply of available equipment slots at mining farms is outnumbering the total supply of mining machines."