Bitcoin Falling: Less than Half as Valuable as it Was Last Year

Last year, in December of 2017, Bitcoin hit its all-time high, an astronomical $20,000 per Bitcoin. Following this high-water mark, the cryptocurrency has been steadily losing value. On Sunday it dipped even lower, now being worth only $7,200 per Bitcoin. It is worth noting, however, that the price is far above what it was this time last year. At that time, a single coin cost $2,800. 

A Sign of a Dying Fad? 

It seems unlikely that this volatility is suggesting any long-term issues for Bitcoin, or indeed, for cryptocurrency in general. Many find cryptocurrencies to be ideal, as the blockchain technology that powers them is secure and difficult to fool. While most markets have been hesitant to pick up the currency, it’s likely not becoming irrelevant any time soon. Recent fluctuations are only natural. As demand waxes and wanes, mining operations scale up and GPU prices stabilize, changes in price like this are to be expected. 

Notable opponents of Bitcoin, Warren Buffet and Jamie Dimon have both recently reiterated their reservations about the new form of currency. Regarding Bitcoin, Buffet had this to say: “When you’re buying nonproductive assets, all you’re counting on is the next person is going to pay you more because they’re even more excited about another next person coming along,”

Effect on Power Companies 

Power companies have taken note of the extreme demand of large crypto-mining operations. Mining Bitcoin requires a tremendous use of power to solve the complex algorithms that yield them. Due to this, mining companies prefer to operate in regions like Quebec, where energy is cheap. In response to this increased demand, Hydro-Quebec, the company that supplies power for the province, has cut off power to mining companies.  

The company has stated it holds no ill-will towards mining companies. In fact, they expressed that they saw crypto-mining as an avenue of growth worthy of consideration. However, in Hydro-Quebec’s own words, they want to exercise caution. “Guidelines are nevertheless required to ensure that the development of this industry maximizes spinoffs for Québec without resulting in rate increases for our customers. We are actively participating in the Régie de l’énergie’s process so that these guidelines can be produced as quickly as possible.” 

Similarly, a few months ago, power companies in New York raised energy rates for mining companies. It seems their ravenous power consumption has begun to have an effect on the average person in their region.