eBusiness Weekly
Jeffrey Gogo
A meeting in Harare tomorrow (July 28) will seek to debunk the complexities of bitcoin mining, even to an audience held captive by financial regulators steeped in tradition, one that resists change.
Cryptocurrencies are virtually banned in Zimbabwe, but they still carry a lot of value in other economies, and, as well for those Zimbabweans that continue to invest and trade in the assets.
The meeting, to be hosted by global mining pool Lifestyle Galaxy at the Island Hospice, will discuss issues around bitcoin mining and what it takes for one to become a profitable miner, even in an economy like Zimbabwe’s, where bitcoin is frowned upon by regulators.
“Bitcoin mining has become more difficult and for people mining on their own is not financially rewarding,” said a company official.
“What has been seen in the market is that where groups of miners mine together, it is more rewarding, because the computer processing power is pooled together to do the cryptography which is the verification process.”
Cryptocurrency mining is a process that creates new digital coins by solving difficult mathematical problems using a network of super computers everyday, non-stop.
Miners earn a certain amount of money, which is paid in bitcoin, for finding the solutions that allow transactions to go through the blockchain system.
For bitcoin, roughly 16,5 million coins have entered into circulation to date, and only a maximum 21 million will ever be issued. We have indicated previously that about 3 500 bitcoins were minted each day.
That number has since come down to 12,5 bitcoins created every 10 minutes, which is about 1 800 coins each day.
The figure is estimated to continue declining until the entire 21 million supply threshold is reached, seven years from now.
The falling number of bitcoins mined each day also means a decrease in profits for miners, a situation that until only a few days ago has been complicated and worsened by rising mining costs, a lack of new investment into crypto and falling prices.
This matter was discussed at length in our issue of July 13, titled “Why bitcoin mining no longer profitable at current values”.
Cryptocurrency summer
Hashflare, the global cloud mining services provider, announced last week that it was shutting down because mining was no longer profitable
The closure left thousands of individual miners in lurch, frustrated contracts had been cancelled even without recouping the sum invested, much less making a profit.
But miners can look forward to start making some money again, as more efficient mining equipment enters the market, and more money flowing in, helping the price of bitcoin to rally more than 20 percent to $8 175 in the fortnight to July 25.
Graham Kaulback, one of the key speakers at the Lifestyle Galaxy meeting in Harare tomorrow believes that the digital currency markets were now entering “the cryptocurrency summer” from a “cryptocurrency winter”, which had made mining unprofitable and kept prices depressed.
“I am hugely excited about the cryptocurrency space and blockchain technology, and the global movement in this direction,” says Kaulback, an entrepreneur and cryptocurrency enthusiast, in a video posted on his Facebook timeline about the meeting.
Kaulback, a former Zimbabwe Rugby national team player and assistant coach, says the conference will be “about information sharing on cryptocurrencies and blockchain technology, and specifically how us as Zimbabweans can take advantage of this global trend in terms of creating wealth, and the more sustainable way to create wealth in this sector.”
Low adoption rate
We estimate that the bitcoin adoption rate in Zimbabwe is +/- 0,004 percent of the population or one in 260 people, according to calculations by the Business Weekly.
The figures are based on the 50 000 crypto investors reported active on the Harare-based digital currency trading platform Golix before its demise in May.
The numbers show that bitcoin has enormous potential to grow in Zimbabwe, and that the trajectory could only accelerate, never linear.
The former number of active users on the Golix exchange attest to this, too.
There were only a few hundred people trading virtual currencies on the platform when it began operations in September 2015. Those numbers didn’t grow for a good number of months until the price of bitcoin went to the moon last year, hitting a peak of $33 000 locally.
However, many others still remain on the fringes where mining is concerned.
And a ban on cryptocurrencies by the Reserve Bank of Zimbabwe in May does not inspire much confidence.
“We find that governments are sometimes very hesitant to accept these currencies, but we have also seen that some companies are selling products now using cryptocurrencies as an option,” Phil van Rooyen, a veteran South African bitcoin miner and investor, told the Business Weekly in an interview.
“In Zimbabwe the notion by government is still very resistant towards cryptocurrencies, but these currencies still carry value outside the country.
The Government will only lose out on the income potential of these currencies because they choose not to participant,” he said.
Lifestyle Galaxy is a global mining pool that sells contracts to individuals to mine Bitcoin, Ethereum, Litecoin, Expanse and ZCash.
The contracts last up to three years, with rewards paid on a daily basis, although investors are required to reinvest about 35 percent of their earnings into the business each month.
The more money invested at the start, the more your return on investment.
Lifestyle Galaxy pays a bonus to contract holders if they recruit a
new member, with residual commissions earned as the pool or team members in this binary compensation set up grows.
