The top four Bitcoin mining firms are on course to take control over nearly the whole industry by the end of 2020. According to the industry report by TokenInsight, a crypto analysis company, these mining firms are bound to expand their operations within the year significantly increasing their market share.
The TokenInsight report predicts that the top four mining firms, Bitmain, Whatminer, Canaan, and Ebang, will hold a combined 98% market share by the end of the year. This will raise the four firms combined dominance over the industry, currently standing at 95%, by 3%. The prediction comes as a little surprise to the crypto analysis firm as they attribute it to network effects within the sector. According to Johnson Xu, an analyst at TokenInsight, it is an extension of the companies’ firm grip over the industry that continues to tighten year after year.
The top four companies consistently have had strong market power in the past; going into the future, this strong market power will translate into the dominant positions of the top four companies.
Xu also pointed to the increasing barriers of entry into the Bitcoin mining industry which lower competition for the established firms. Both newcomers and other small miners are required to make heavy investment in mining hardware for them to be able to compete with the incumbents. Additionally, a lot of money is required for research and development as well as setting up and running logistics globally.
The miners also require huge investment in marketing to attract more investors and to remain relevant in a very competitive industry. All of these factors are highly prohibitive thus leaving room for the existing miners to further exert their dominance in the industry.
The report predicts that Bitmain, the largest Bitcoin mining firm, will grow its market share from 55-58% held in 2019 to 63% in 2020. This bold prediction is made based on the fact that the company is shutting down its failing AI business line due to high cost and low profitability. Consequently, Xu believes that Bitmain will turn all its attention and resources to Bitcoin mining which will substantially boost its control.
Once Bitmain consolidates its resources and restructuring its business in a better way, its market share will increase because of its market power and branding
It is also expected that the other top miners Canaan, Whatminer, and Ebang will control 18%, 10%, and 7% of the entire bitcoin mining industry respectively in 2020.
Image courtesy of Pixabay
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