Bitcoin is getting hammered in markets that trade the digital currency, prompting providers of its core computing infrastructure to shut down operations. <\/p>\n
The selloff, which appears to have been exacerbated when Asian traders were forced to meet collateral demands under margin trading rules, left bitcoin down 14.49% at $194.04 in the late New York morning Wednesday, following a 15.02% plunge Tuesday, according to news service Coindesk. The digital currency is now down 39% from Dec. 31 alone and is off 83% from the all-time high of $1,165 that it hit at the end of a furious rally in November 2013. <\/p>\n
That price decline is creating something of a mini-crisis in the business of bitcoin mining, the vital process through which new bitcoins are added to the money supply. Working within a network of independent computers, bitcoin miners are tasked with confirming transactions initiated by users of the digital currency and compete to solve a mathematical puzzle in order to be compensated for that work with newly issued bitcoins. <\/p>\n
As the price of bitcoin falls against the dollar and other fiat currencies, it induces miners to shut down operations, because they can no longer cover costs such as equipment, rent and electricity quoted in those traditional currencies. The problem was made more acute by what had been a yearlong, exponential buildup in mining infrastructure -- machines comprised of highly specialized, super-powerful computers -- which made competition for bitcoins tougher. Bitcoins core software algorithm periodically adjusts the difficulty of its mathematical puzzle to keep it in line with the amount of computing power in the network. That way, new bitcoin payouts are kept to more or less a 10-minute schedule regardless of how well equipped the miners are to solve the puzzle. <\/p>\n
On Monday, CEX.io, a company that mines bitcoins on behalf of clients that rent out its computing power, announced that it would temporarily halt this cloud mining operation, citing the recent bitcoin price drop, as well as the upscaling of the mining difficulty. <\/p>\n
An expanded version of this report appears at WSJ.com. <\/p>\n
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Bitcoin price plunges, prompting concerns about mining ...<\/a><\/p>\n","protected":false},"excerpt":{"rendered":" Bitcoin is getting hammered in markets that trade the digital currency, prompting providers of its core computing infrastructure to shut down operations. The selloff, which appears to have been exacerbated when Asian traders were forced to meet collateral demands under margin trading rules, left bitcoin down 14.49% at $194.04 in the late New York morning Wednesday, following a 15.02% plunge Tuesday, according to news service Coindesk. The digital currency is now down 39% from Dec Continue reading