Saying that crypto investors had a rough year for 2018 can be an understatement. In mid-December last year, Bitcoin was able to reach near $20K. By January, the crypto market experienced its all-time high. However, last week, the crypto market has lost 80% of its value in just a span of 8 months. Many already compared the crypto market to the dot-com bubble.
So far, Bitcoin has been showing stability at around $6,500 as other altcoins drop. Ethereum last week already lost 45% of its value in a span of 30 days only to recover the following days.
However, if you are going to be mining Bitcoin at this point, you may want to reconsider your decision. Do you HODL or do you simply turn your machines off at the moment? According to Sam Doctor’s tweet, FUndstrat Global Advisor’s quantitative strategist and analyst, the hashrate of the Bitcoin network doubled since May. From 28 quadrillion hashes per second it has reached around 57 hashes per second today.
According to the analysis, considering factors such as electricity and cost of ASICs, miners will have to wait for Bitcoin to reach $7,300 in order to breakeven. In May, Bitcoin only has to be around $6,000 per unit for the miners to breakeven. According to Doctor, “Despite BTC bear market, hashpower doubled since May to 57 EH/s—Even with upgrades to existing equipment, implies almost 1GW of new power consumption vs 5.2GW in May 18. Breakeven now $7,300 ($5,300 cash BE) vs. $6,000 in May—Mining becoming FCF”.
Tom Lee Backed the Analysis
Tom Lee who is known as Fundstrat’s head of research has backed up this claim. He retweeted the analysis by Sam Doctor. Tom Lee has been known for his prediction that Bitcoin will be able to reach $22K this year. He believed that the entry of institutional investors will make this happen.
This time around, Tom Lee noted that Bitcoin can trade upwards at 2.5 times the cost of mining. He noted that it has been seen in last year’s bull run and in the course of Bitcoin’s history.
What exactly caused the rising hashrate at this point? It has been reported that the rise in the hashrate has been attributed to the expansion of corporate miners. Though home-based miners are shutting off their machines due to the low profitability of mining activities, there are corporate miners that are willing to take the risk. According to Marco Streng who works as the CEO of Genesis Mining, “There are still major expansions happening especially from more efficient miners. The expansion is so big that it compensated for the drop-out of not-so-efficient miners”.
As for David Sapper who worked as the COO of the crypto exchange Blockbid, miners are willing to mine Bitcoin despite the profitability. He thinks that the corporate miners are willing to HODL. He mentioned that “The increased hash rate means people are here for the long-term because they’re happy to just accumulate what they have, potentially even run at a loss. At the same time, they do sometimes have to clear house and dump”.