JAN 27, 2024
OKX to shut down mining-related services
Leading crypto exchange platform OKX has disclosed plans to discontinue its mining pool services, marking a strategic shift for the platform.
Service shutdown within one month
The move, outlined by the firm in a notification to platform users on Friday, involves ceasing new user registrations effective immediately. Existing users will be granted access to the mining pool until Feb. 25. All mining pool-related services on OKX will be completely halted by Feb. 26.
Mining Pools data reveals that OKX holds the 36th position among the top 70 bitcoin-focused mining pools, boasting a total hash rate slightly exceeding 496 TH/s.
The decision to phase out mining pool services was attributed to “business adjustments,” as communicated by OKX, though further details were not provided regarding the specific nature of these adjustments.
Previously, OKX’s mining pool supported various proof-of-work cryptocurrencies and offered staking services. However, over recent years, many supported assets had been terminated. Presently, the website only displays bitcoin, litecoin and ethereum classic pool services.
Once accounted for 5% of all BTC blocks mined
OKX’s bitcoin mining pool had once accounted for around 5% of the blocks mined on the network. However, a setback occurred on October 16, 2020, when the crypto exchange temporarily suspended withdrawals due to one of its private key holders “cooperating with a public security bureau in investigations.” This led to a significant drop in hashpower connected to the pool, from 9,000 PH/s to 20 PH/s. The pool’s current 528 TH/s now represents less than 0.0001% of bitcoin’s total hash rate.
Industry trend forming
This strategic move by OKX reflects the evolving landscape of the crypto industry and the challenges faced by mining pools, particularly in the context of regulatory and operational adjustments within the market. The decision may even amount to a formative trend, given that global crypto exchange platform rival KuCoin made a similar move back in August.
At the time, KuCoin outlined its plans to temporarily suspend its bitcoin and litecoin mining pools. Although it suggested a temporary halt to such services, there was no indication of when such mining-related services would resume. A company spokesperson stated:
“We will see if it is needed to restart based on the market and users’ demand in the future.”
Bitcoin halving pressures
OKX’s decision to discontinue mining pool services comes ahead of bitcoin’s anticipated fourth halving in April, which is expected to reduce miner rewards from 6.25 to 3.125 BTC. The halving is casting a shadow over the mining sector.
Miners’ business cost per bitcoin mined is going to increase significantly. Some industry commentators speculate that the break-even point for miners will reach an unsustainable level.
NASDAQ-listed Riot Blockchain, in particular, is being singled out as potentially being susceptible due to its cost structure. Miners have had a difficult couple of years, working their way through the bear market component of the last market cycle. That period saw leading miner Core Scientific declare bankruptcy. The company has since restructured and has been relisted on the NASDAQ.