Bitcoin mining is perhaps best viewed as a speculative endeavor.
Miners take electricity and turn it into bitcoin, hoping that they can generate a profit when the cost of producing the digital currency is less than the amount spent on power. When they can’t, miners have two options – they can begin mining another cryptocurrency or shut down their equipment for good.
For some miners, the recent bitcoin halving forced this very choice.
Early this summer, the amount of bitcoins the network was programmed to pay out per block was cut in half, falling from 25 to 12.5 BTC. In a matter of minutes, bitcoin mining became less profitable.
But, rather than abandon their machinery and their efforts, a notable minority elected to begin mining a cryptocurrency called peercoin.
While there were other options that could have been considered, there were some reasons for the specific choice. Launched in 2012, peercoin is among the more tenured cryptocurrencies, and it uses a similar hash function as bitcoin.
After all, for miners to liquidate the cryptocurrencies that they mine, there needs to be a market, and in order to mine those coins, their equipment needs to be compatible with the network.