• Advertise
  • Submit a Press Release
NewsBTC
Bitcoin & cryptocurrency news
Crypto.com Logo
  • Home
  • News
    • Bitcoin
    • Ethereum
    • Cardano
    • Dogecoin
    • Ripple
    • DeFi
    • NFT
    • Sponsored
    • Press Releases
  • Analysis
    • Bitcoin (BTC)
    • Ethereum (ETH)
    • Cardano (ADA)
    • Chainlink (LINK)
    • Litecoin (LTC)
    • Tezos (XTZ)
    • Zcash (ZEC)
    • EOS
    • YearnFinance (YFI)
  • Trading Course
  • Directory
    • Crypto Businesses
    • Bitcoin Brokers
    • Casinos
    • Sportsbooks
  • Play GamesTry
  • Bet & WinTry
  • Bitcoin Casino ReviewsTry
No Result
View All Result
  • Home
  • News
    • Bitcoin
    • Ethereum
    • Cardano
    • Dogecoin
    • Ripple
    • DeFi
    • NFT
    • Sponsored
    • Press Releases
  • Analysis
    • Bitcoin (BTC)
    • Ethereum (ETH)
    • Cardano (ADA)
    • Chainlink (LINK)
    • Litecoin (LTC)
    • Tezos (XTZ)
    • Zcash (ZEC)
    • EOS
    • YearnFinance (YFI)
  • Trading Course
  • Directory
    • Crypto Businesses
    • Bitcoin Brokers
    • Casinos
    • Sportsbooks
  • Play GamesTry
  • Bet & WinTry
  • Bitcoin Casino ReviewsTry
No Result
View All Result
NewsBTC
No Result
View All Result
Bitcoin Mining Museum, bitcoin btc crypto mining cost of production hash ribbons
Nexo Logo

Bitcoin Trades Below Production Cost, Miners Are Better Off Buying

Tony Spilotro by Tony Spilotro
2 years ago
in Bitcoin, Cryptocurrency news
Reading Time: 4 mins read
Advertisement

Bitcoin recently experienced a historic single-day drop, taking the cryptocurrency from $7,500 to under $4,000 in less than 48 hours.

The first-ever cryptocurrency is now trading below the cost required by miners to produce each Bitcoin. Now that miners are better off buying BTC outright, what could this mean for the strength of the underlying network, the asset’s future, the upcoming halving, and the price of Bitcoin?

Bitcoin Falls Under Cost of Production, Miners May As Well Buy BTC Instead

Bitcoin may be in its most dangerous position yet, following one of the asset’s worst 24-hour drop in its short, ten-year history.

5 BTC + 300 Free Spins for new players & 15 BTC + 35.000 Free Spins every month, only at mBitcasino. Play Now!

As the stock market melts down, and the coronavirus shuts down all human activity, Bitcoin and the rest of the cryptocurrency market also tanked as the globe entered a state of lockdown and panic.

The drop took Bitcoin from $10,500 just a month ago to $7,500, then to below $4,000 just days ago.

The crypto asset is trading around $5,000 at the time of this writing, which is still well below the cost to produce each BTC.

BitStarz Player Lands $2,459,124 Record Win! Could you be next big winner?
Get 110 USDT Futures Bonus for FREE!

bitcoin mining cost of production

The underlying Bitcoin blockchain protocol is powered by a process called proof of work, which involves miners using computer processing power to make complex calculations to validate each new block.

The reward for doing this that miners receive is BTC. But there’s an energy cost associated with operating miners that must be considered.

Read our comparison of 50 different crypto casinos. Find out who has most generous bonuses, best UX, knowledgeable customer support and best provably fair games.

And if that cost is higher than the value of Bitcoin, miners would be better off buying the asset rather than running rigs and continuing to power the network.

That’s exactly what has happened now that Bitcoin has fallen to such low prices. It’s at the point where even on the cheapest end of producing each BTC, miners would still struggle to be profitable at current prices and are better off buying outright.

Post-Halving Hell: Miner Metrics Suggest The Worst Is Yet To Come

According to the current cost of production, on the highest end, it costs around $8,000, and on the low end, it costs roughly $4,800.

That implies that most miners are currently running their machines at a loss.

The cost of production is also about to rise significantly within the next two months. While the halving was expected to be a bullish event, causing the supply and demand to be thrown off in favor of skyrocketing prices, it very well could end up being bearish this time around.

The halving cuts the reward miners receive in half. This means that in just two months when Bitcoin’s halving rolls around, the cost of production will double overnight, taking the aforementioned prices to $16,000 on the high end and $9,600 on the lower end.

Mining difficulty will decrease as miners shut off their rigs, and eventually, the cost to produce each BTC will lower to compensate, but the initial, sudden change in reward could have unknown implications.

Another metric that follows mining activity, are Bitcoin’s hash ribbons. In the past, these hash ribbons have signaled when miners are about to capitulate, and following this is normally a huge buy signal for Bitcoin.

bitcoin cost of production mining btc

Miners capitulated in late 2018 and again in late 2019. The hash ribbons are currently curling downward and with the cost of production so low, miners could capitulate again, causing yet another massive selloff.

The only positive amidst the negative outlook related to Bitcoin mining is that after the destruction ends, a buy signal usually takes Bitcoin to a new all-time high.

bitcoin mining hash ribbons halving capitulation

During past Bitcoin cycles, the hash ribbons had three major phases of capitulation before the new bull run triggered. Bitcoin has had two, and the next major miner capitulation could be the final shakeout before the next bull market finally kicks off.

Tags: bitcoincryptocryptocurrencyhalvingmining
Tweet123Share196ShareSend
Win up to $1,000,000 in One Spin at CryptoSlots
Tony Spilotro

Tony Spilotro

I'm Tony Spilotro. Behind the pseudonym, I'm a global remote work leader with a decade of award-winning content experience and excellence. Here, I explore my newfound passions pertaining to privacy, finance, economics, politics, cryptography, property rights, and other libertarian-esque views. I am a Bitcoin evangelist, maximalist, and educator whenever I can be, helping to spread its message of freedom from government control, monetary policy mismanagement, and passing the buck - literally – to future generations. My journey from a curious retail crypto investor to a serious Bitcoin advocate, trader, and technical analyst is an unusual one, but life-changing nonetheless and has become less about money and more about a long-overdue revolution. While a firm believer in the laws governing math and science, I am profoundly fascinated by the impact of astrology and astronomy including moon and solar cycles and planetary alignment and their ability to influence and potentially predict markets. It hasn't yet clicked for me as to how to put anything to use, but I consider it my current rabbit hole I can't yet dig out of. My perspective of growing up alongside the internet, the dot com era, the Great Recession, and roots in video games collecting coins and rare items caused Bitcoin to immediately make sense to me. Through all of these lenses, I seek to produce content that is educational and entertaining, and I thank you sincerely for taking the time to read what I have to say. Please follow me on Twitter at @tonyspilotroBTC and feel free to drop me a line if you would like to work together.

Related Posts

How Gold Continues To Prove To Be A Hedge Against Inflation

How Gold Continues To Prove To Be A Hedge Against Inflation

53 mins ago
Has Mark Cuban Changed His Mind on Cardano?

Has Mark Cuban Changed His Mind on Cardano?

56 mins ago
AAVE

AAVE Slowly Climbs To $109, Resistance At $113 Looms

5 hours ago
SOL

SOL Makes Another Shot At $44, After Two Failed Attempts This Week

7 hours ago
Cosmos

Cosmos Hub Soars Over 5% Within 24 Hours – ATOM Up 13% In Last Week

9 hours ago
7 Best Altcoins Everyone is Talking About

7 Best Altcoins Everyone is Talking About

13 hours ago

Premium Partners

Top Brokers

PrimeXBT

PrimeXBT

Review · Visit

Top Casinos

BitStarz

BitStarz

Review · Visit
7BitCasino

7BitCasino

Review · Visit
Punt Casino

Punt Casino

Review · Visit
mBit

mBit

Review · Visit
CryptoGames

CryptoGames

Review · Visit
Bspin

Bspin

Review · Visit

Sportsbooks

1xBit

1xBit

Review · Visit

Dubai To Be the Web 3 & Metaverse Capital of The World

August 12, 2022

MEXC activated the “Investor Protection Fund” in response to the Dragoma (DMA) incident, and launched the “potion” airdrop compensation benefits

August 12, 2022

XT.com Lists IVAR Coin (IVAR) With USDT Trading Pair

August 12, 2022

WEB5 Inu ($WEB5) launches the next-generation Decentralized Finance (DeFi) cryptocurrency

August 12, 2022

GNOX (GNOX) Presale Sell-out Causing Dogecoin (DOGE) And Fantom (FTM) Holders To Flock In For Launch

August 12, 2022

ABOUT US

NewsBTC is a cryptocurrency news service that covers bitcoin news today, technical analysis & forecasts for bitcoin price and other altcoins. Here at NewsBTC, we are dedicated to enlightening everyone about bitcoin and other cryptocurrencies.

We cover BTC news related to bitcoin exchanges, bitcoin mining and price forecasts for various cryptocurrencies.

COMPANY

  • Advertising
  • Comments Policy
  • Privacy Center
  • Sitemap
  • About Us
  • Contact

Technical Analysis

  • Bitcoin (BTC)
  • Ethereum (ETH)
  • Ripple (XRP)
  • Chainlink (LINK)
  • Cardano (ADA)
  • Tezos (XTZ)

LINKS

Crypto Prices from Nomics

Cryptocurrency news

  • Bitcoin
  • Ethereum
  • Ripple
  • Chainlink
  • Cardano
  • EOS
  • Tezos

© 2021 NewsBTC. All Rights Reserved.

  • Home
  • News
    • Bitcoin
    • Ethereum
    • Cardano
    • Dogecoin
    • Ripple
    • DeFi
    • NFT
    • Sponsored
    • Press Releases
  • Analysis
    • Bitcoin (BTC)
    • Ethereum (ETH)
    • Cardano (ADA)
    • Chainlink (LINK)
    • Litecoin (LTC)
    • Tezos (XTZ)
    • Zcash (ZEC)
    • EOS
    • YearnFinance (YFI)
  • Trading Course
  • Directory
    • Crypto Businesses
    • Bitcoin Brokers
    • Casinos
    • Sportsbooks
  • Play Games
  • Bet & Win
  • Bitcoin Casino Reviews

© 2021 NewsBTC. All Rights Reserved.

This website uses cookies. By continuing to use this website you are giving consent to cookies being used. Visit our Privacy Center or Cookie Policy.