Bitcoin miners can take fresh 20% BTC price hit before capitulating, data shows

The
Bitcoin
(BTC)
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

noted

by
popular
Twitter
account
@venturefounder
on
Jan.
14,
even
at
$42,000,
the
BTC/USD
trading
pair
is
around
20%
above
miners’
cost
price.

Miner
capitulation
behind
“worst”
BTC
price
dips

Despite
falling
a
full
$27,000
below
all-time
highs,
BTC
is
more
enticing
than
ever
for
miners.

Hash
rate
,
an
estimate
of
the
total
processing
power
dedicated
to
mining, reached

new
all-time
highs
this
week
.

Those
concerned
that
a
fresh
BTC
price
dip
could
pressure
miners
into
selling,
meanwhile,
received
fresh
assurances
via
data
covering
how
much
BTC/USD
should
trade
at
for
them
to
break
even.

Referencing
the
BTC
production
cost
indicator
from
Charles
Edwards,
CEO
of
asset
manager
Capriole,
venturefounder
revealed
that
the
breakeven
point
currently
stands
at
$34,000.

“The
worst
dumps
Bitcoin
ever
had
were
due
to
miners
capitulation
(December
2018,
March
2020),
when
BTC
fell
below
production
costs,
it
is
at
risk
for
miner
capitulation,”
he
added
in
comments.

“BTC
was
at
risk
for
miner
capitulation
at
$30k
in
May.
The
current
production
cost
is
$34k,
20%
below
current
price.”


Bitcoin
production
cost
annotated
chart
(screenshot).
Source:
@venturefounder/Twitter

As
such,
there
is
no
reason
for
miners
to
sell
thanks
to
the
profitability

as
well
as
future
perspective

of
their
operations.

In
a
Medium

post

about
his
indicator
from
2019,
Edwards
additionally
noted
that
transaction
fees
awarded
to
miners
give
them
an
additional
cushion
against
spot
price
incursions
below
production
cost.

“Historically,
the
electrical
cost
to
produce
a
Bitcoin
has
represented
a
price
floor
in
the
Bitcoin
market
price,”
another
insight
reads.

Mining
shrugs
off
spot
price
moves
this
year

As
Cointelegraph
reported,
miners
are
indeed
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
haul:
Fidelity
report

Rather
than
selling,
miners

en
masse

have
been accumulating
BTC
more
this
month
and
last
than
during
the
highs.

This
speaks
both
to
a
healthy
balance
sheet
and
resolve
over
the
future

fears
of

economic
difficulties

on
the
horizon
are
not
currently
weighing
on
the
mining
sector.


Bitcoin
hash
rate
chart.
Source:
Blockchain

Going
forward,
current
worst-case
scenario
estimates
among
well-known
analysts
foresee
a
BTC
price
floor

no
lower
than
$30,000
.

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