Sunday, January 29

Bitcoin miners could withstand a 20% drop in BTC price, before capitulating

The Bitcoin mining business is bigger than ever at current price levels. And the new data shows just how unlikely a massive BTC miner crisis really is.

What he pointed the popular Twitter account “@venturefounder” on January 14or. “The price of Bitcoin is around 20% above the cost of production for minerss».

BTC miner capitulation not a current risk

Despite falling $27,000 below all-time highs, Bitcoin is more attractive than ever to miners. The hash rate, an estimate of the total processing power devoted to mining, hit new all-time highs this week.

The Bitcoin hash rate has hit new highs this week. Fountain:

Meanwhile, those concerned that a further drop in Bitcoin’s price could pressure miners to sell their assets were given new reassurances via data covering how much BTC/USD would need to trade at for them to break even.

Referencing Bitcoin production cost gauge from Charles Edwards, CEO of asset manager Capriole, Venturefounder revealed that the price break-even point for Bitcoin is currently $34,000.

“The worst crises that Bitcoin has had were due to the capitulation of miners in December 2018 and March 2020, when Bitcoin fell below production costs», he added in the comments.

«EBitcoin was at risk of miner capitulation, when it hit $30,000 in May. Current production cost is $34,000, 20% below current priceEdwards said.

As such, there is no reason for miners to sell their BTC, thanks to the current profitability. Thus, as to the future prospects of the cryptocurrency market.

In a publication of Medium on the cost of production of Bitcoin, in 2019. Expert Charles Edwards pointed out that the transaction fees granted to miners give them an additional cushion against spot price incursions below the cost of production.

Miners are accumulating Bitcoins

The new ones data, show that Bitcoin miners are amassing more coins than at any time in the last five months. Which could be a sign that current prices are not for a sell-off.

Likewise, the popular Twitter account “Bitcoin Archive” described a “massive” accumulation by the miners.

According to data from Glassnode, instead of selling, Bitcoin miners have been accumulating their BTC this month.  Source: Glassnode
According to data from Glassnode, instead of selling, Bitcoin miners have been accumulating their BTC this month. Fountain: Glassnode

Also, according to shows Glassnode, a Bitcoin accumulation trend has accelerated since hitting highs of $69,000.

This represents a healthy overall balance of the market and shows that current fears of future economic difficulties do not have a significant weight on the mining sector or on Bitcoin.

Currently, the minimum estimates in the worst case, among recognized analysts, predict a minimum price of Bitcoin of no less than $30,000 dollars.

A large number of Bitcoin miners seek to leave Kazakhstan

After becoming in 2021 the second country in the world with the highest concentration of Bitcoin miners. Kazakhstan has become a hotspot to develop mining. This was revealed by a research from Reuters. According to which, a large number of mining companies would be preparing to leave the country.

The report points out that the different Bitcoin mining farms are afraid that the political and economic instability that has been developing in Kazakhstan since the beginning of this year 2022, and the threat of stricter regulations for mining, will leave them bankrupt. For this reason, they are considering transferring at least part of their operations to countries such as the United States and Russia.

The first week of this year, Kazakhstan has been under massive protests that prompted the government to take extraordinary measures, such as cutting off power to certain regions and regulating internet service, leaving mining farms offline. This event produced a sharp 12% drop in the Bitcoin hash rate.

Although they already arise news positive about the ending of the situation and the withdrawal of troops by Russia. Bitcoin miners consider that “the development and stability of the mining industry in Kazakhstan is still in danger.”

However, small miners in Kazakhstan are hesitant to move to another country. For these small operators, there still seem to be profitable advantages, with relatively low taxes (for the moment), as well as very competitive labor costs compared to other countries.