In terms of price Bitcoin has had a pretty rough week. The 8.5% slide had been largely predicted though and things are pretty bearish for cryptocurrencies at the moment. Fundamentally, the Bitcoin network continues to strengthen as the economies of the planet continue to weaken.
Bitcoin Transfers $10 Billion Per Day
If Bitcoin is looking bad then the global financial macroeconomic situation is a nightmare. The US Federal Reserve has ramped up its repo cash injections as it tries to keep the banks afloat. BTC is still doing what it was designed to in a world that is largely against it. As a peer to peer decentralized currency it does exactly what it says on the tin.
The problem at the moment is that most of it flows through centralized exchanges which, just like banks, want to take their cut. The actual amount of wealth transferred using Bitcoin in the past decade is quite staggering for a technology that is still in its infancy.
Industry observer ‘Plan B’ has been looking into this and has tabulated the figures.
#bitcoin transferred $11 trillion in wealth (2009-2019)
Still going strong at $10 billion each day pic.twitter.com/jAphbfYUzh
— PlanB 🔴 (@100trillionUSD) October 24, 2019
The price action comes about as traders panic and transfer back into fiat during bear markets. The accumulation effect triggers more selling off and the price tumbles further. Bitcoiners can largely be broken down into two groups, day traders and short term profit takers, and long term hodlers that believe in the technology and what it stands for.
Hash Rate Still Climbing
Another measure of network strength is Bitcoin hash rate. According to Bitinfocharts.com this metric hit a new record of 110.6 EH/s a couple of days ago. Other analytics websites such as Coin.Dance recorded even higher values at 135 EH/s. The bottom line is hash rate is hitting new highs despite the bearish pressure on prices.
Higher numbers means greater computing power which in turn relates to more confidence from BTC miners. ‘Skew Markets’ also noted that power consumption has also increased by three times since the 2017 peak.
“Consuming ~3x+ more electricity than when BTC peaked in Q4 2017 – ~80 TWh annually. Marginal production cost of 1 BTC excluding hardware ~$5,260 currently & will double next yr post halving…”
Bitcoin hash rate continues to make new highs despite the weaker market
Consuming ~3x+ more electricity than when BTC peaked in Q4 2017 – ~80 TWh annually
Marginal production cost of 1 BTC excluding hardware ~$5,260 currently & will double next yr post halving… pic.twitter.com/a373uTX2p0
— skew (@skewdotcom) October 24, 2019
The discussion continued on how these calculations are derived but it is an inexact science with many variables such as cost of electricity and mining hardware used. The implication is that miners are still confident in Bitcoin’s long term profitability.
Profitability is key for BTC mining, if the cost of producing a Bitcoin falls below the market value of one then hash rate is likely to fall as mining rigs get shut down until the bulls get back into the markets.
Next year’s block halving will intensify competition among miners who will then only get 6.25 BTC instead of 12.5 per new block.
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