OKX Stops Pool Mining Service, OKB Drops 50% Due To Flash Crash

OKX stopped operating its crypto mining pool. (Photo; Doc. TheEdgeMarket)

JAKARTA One of the leading crypto exchanges, OKX, recently announced that it would stop mining pool services and related products on February 26, 2024. This decision was taken as part of OKX's business adjustment amid fluctuating crypto market conditions.

For information only, mining pools or mining pools are services that allow crypto miners to join and mine blocks together, then share the rewards according to their respective contributions. OKX provides mining pools for mining a number of cryptocurrencies, including Bitcoin, Ethereum, Litecoin, and others.

According to OKX's official statement, registration of new users for mining pools has been closed since January 26, 2024. Meanwhile, registered users can still use services until February 25, 2024. After that, all services related to mining pools will be permanently suspended.

OKX did not explain the reasons behind the termination of this service. However, some analysts suspect that this is related to the low profitability of crypto mining, especially ahead of the Bitcoin halving which is expected to occur in April 2024. Halving is an event where the reward for mining a block of Bitcoin is reduced by half, from 6.25 BTC to 3.125 BTC.

Halfing Bitcoin has an impact on a decline in new Bitcoin supply, which in turn could increase the price of Bitcoin. Even so, halling events also have an impact on miners' operating costs which are considered to be increasing, while their income is declining. Therefore, many miners have to increase their efficiency or stop their activities.

OKX itself is one of the leading crypto exchanges in the world, with daily trading volumes reaching $2.5 billion (IDR 39.51 trillion). OKX also has its own utility tokens, namely OKB, which are used to pay transaction fees, get discounts, and access exclusive services on the OKX platform.

However, the price of OKB dropped drastically on January 23, 2024, when the price fell more than 50% in 15 minutes. OKB fell from $52.02 (Rp 822,000) to $25.10 (Rp 397,000) on the OKX exchange, before it rebounded quickly. The price of OKB is currently in the range of $52.81 (Rp 835,000), according to TradingView data.

OKX blamed OKB's flash crash on a series of liquidations triggered by a large leverage position as OKB hit $448.36 (Rp 764,000). This causes massive sales in the market, which exacerbates the decline in OKB prices. OKX said it would compensate for user losses affected by forced liquidation of OKB, including price differences, fines, and transaction fees.

The OKB flash crash occurred as the crypto market volatility increased, which was affected by various factors, such as the sale of Bitcoin by Grayscale Bitcoin Trust, one of the largest crypto investment products in the world. In addition, OKX has also just canceled its decision to delisting eight cryptocurrencies focused on privacy, such as Monero, Zcash, and Dash, after receiving protests from the crypto community.