Bitcoin before the end of 2017 was at near $20,000 only to have another correction and lose more than 69% of its value. It is now trading around $6,200 to $6,500 and has become less volatile than tech stocks such as Amazon or Netflix. However, despite this, there is still the increase in the hash power of the Bitcoin network. In the last 10 months alone, from 15 million TH/s, it has jumped to over 50 million TH/s.
Small Miners No Longer Earning?
Because of this scenario, gone are the days when small players can still earn from mining Bitcoin. In order to stay competitive within the niche, it is imperative that you have powerful computers and it should be by the volume. And this is true that 70% of the current Bitcoin network’s hash rate now belongs to China’s mining firms.
Right now, the breakeven cost of mining according to the research of blockchain analyst Barclay James is at around 35 million TH/s and the value is at $6,900. This is a formula that has been used to compute the hashing power of an ASIC Bitcoin miner and the efficiency when it comes to producing Bitcoin. What this means is that Bitcoin has to be at $7,000 and $8,000 range.
Why do miners keep on mining? The reason why miners today are not shutting down their mining hardware is because they are expecting it to increase in the next few months.
Miners outside the mountainous region of Sichuan that don’t have the benefit of having a cold climate that naturally cools down crypto mining equipment, it is even more expensive to run a Bitcoin mining operation. The paper by Barclay James mentioned that “China has some of the world’s cheapest electricity rates as well as average temperature with temperate regions. This is important as cooling is one of the largest overheads in mining. In addition, the country’s generally low operating costs also give it a competitive advantage. In fact, current estimates place 70% of global hashing power in China, the majority of which is in the Sichuan region”.
Could It Become Bullish Soon?
Right now, Bitcoin miners are losing since June. The hash power has continuously risen throughout the year. But their confidence in Bitcoin is not really surprising.
Is it possible that Bitcoin could become bullish soon? There are a number of developments that could potentially increase the chances of Bitcoin price going up in the next few months. You have the possibility that a Bitcoin ETF could be approved soon. There are experts that are optimistic regarding the price of Bitcoin in the coming months. Tom Lee even thinks that it is still possible for Bitcoin to reach $25K this year.
You also have the likes of Bakkt and Fidelity that has entered the crypto market. Could this potentially bring institutional investors at play soon? Some say that 2019 is a good year especially in the first quarter of the year. However, there is also a possibility that Bitcoin ETF applications will be rejected yet again, and therefore could pull the price of Bitcoin.