The bitcoin (Bitcoin) The mining business is bigger than ever at current price levels, and new data shows just how unlikely a mass miner sell-off really is.
As written down According to the popular @venturefounder Twitter account on Jan. 14, the BTC/USD trading pair is even trading at $42,000, around 20% above miners’ cost price.
Miner Capitulation Behind ‘Worst’ BTC Price Drops
Despite falling as much as $27,000 from all-time highs, BTC is more enticing to miners than ever. hash rate, an estimate of the total computing power devoted to mining, reached new all-time highs this week.
Meanwhile, those worried that another BTC price drop could force miners to sell have received fresh reassurances from data on how much BTC/USD should trade at for it to break even.
Referring to the BTC production cost indicator provided by wealth manager Capriole CEO Charles Edwards, the venture founder revealed that breakeven currently stands at $34,000.
“The worst dumps bitcoin has ever had were due to miner capitulation (December 2018, March 2020) when BTC fell below cost of production there is a risk of miner capitulation,” he added in comments.
“BTC threatened to capitulate miners at $30,000 in May. Current production cost is $34,000, 20% below current price.”Annotated chart of Bitcoin production costs (screenshot). Source: @venturefounder/Twitter
Therefore, there is no reason for the miners to sell, thanks to the profitability – as well as the future prospects – of their operations.
in a medium post Edwards also noted on his 2019 indicator that the transaction fees awarded to miners give them an extra cushion against spot price falls below production costs.
“In the past, the cost of electricity to produce a bitcoin has represented a price floor in the bitcoin market price,” reads another finding.
The mining industry is flinching with spot price action this year
As Cointelegraph reported, miners are actually voting with their wallets as BTC consolidates below $50,000.
Related: Bitcoin Cycle Is Far From Over And Miners Are In It For The Long Term: Fidelity Report
Instead of selling, miners sold en masse accumulate BTC up this month and lately than during the highs.
This speaks both for a healthy balance sheet and for fears about the future economic difficulties on the horizon are not currently weighing on the mining sector.
Bitcoin hash rate chart. Source: Blockchain
For the future, current worst-case scenario estimates by well-known analysts predict a BTC price floor no less than $30,000.
