The cryptocurrency market has continued to be weak recently , and the price of Bitcoin has also been falling. It once reached $58,402 this morning (25th), hitting its lowest point since early May.
Many analysts believe that Bitcoin’s recent decline may be related to the overall economy (fewer interest rate cuts by the Federal Reserve), news (Mt. Got repayment), and chips (options open interest), but few It is believed that this is a sniper targeting Bitcoin miners.
Extended reading: Bitcoin keeps falling, who is selling BTC?
Miners’ operating pressure increases after halving
Bitcoin completed its fourth halving on April 20, and the block reward further dropped from the original 6.25 BTC to 3.125 BTC. Generally speaking, a reduction in block rewards will cause operational pressure on miners, and even force some inefficient Miners quit mining activities.
According to Hashrate Index data , the Bitcoin Hashprice Index plummeted from about $100 per day before the Bitcoin halving to $48.44 now, a drop of more than 50%. As a result, Bitcoin miners now face increasing revenue challenges.
Note: The Hasprice Index is a metric used to calculate the amount of money a miner can earn from a specific amount of computing power
In addition, according to F2pool data , based on the electricity cost of US$0.06 per kilowatt hour, the shutdown price of the popular mining machine "Ant S19 XP Hyd" in the current cycle is US$37,743. Last year, the shutdown prices of the two largest mining machine models "Ant S19" and "Ant S19j Pro" by market share were US$62,077 and US$53,531 respectively.
Extended reading: Bitmain’s S19 mining machine accounts for “76% of the computing power of the entire BTC network”, and its energy efficiency has increased by 60% in five years
According to the current Bitcoin price, the shutdown price of Antminer S19 has already reached. If the Bitcoin price plummets to around 53,000, it may further trigger a wave of capitulation among miners.
Miner capitulation begins with small mining companies
After the price of Bitcoin drops, some small mining companies may choose to sell their Bitcoins to maintain operating costs. However, when the currency price falls further below the "shutdown price" of mining machines, these small mining companies with higher mining costs will be forced to stop operations.
Since the shutdown price of mining machines depends largely on the cost of electricity. Compared with large mining companies, small mining companies are smaller and more difficult to negotiate lower power costs.
In addition, when miners are forced to stop operations, some mining companies may choose to shut down their mining machines and wait for currency prices to rebound before restarting mining; while other mining companies will choose to sell their mining machines at a reduced price and end their mining business.
Large mining companies need more mining machines
On the other hand, Bitcoin rose from US$26,000 in October last year and hit US$74,000 in March this year, a record high. Against this background, in addition to buying Bitcoin, many investors have also turned their attention to the stocks of Bitcoin mining companies. Marathon Digital, the largest Bitcoin mining company in the US stock market, has risen 140% from the low in October last year.
As the value of Bitcoin and mining company stocks rises, large mining companies need to seize more market share to create more market value. In this process, “mining machines” have become a key resource for the expansion of mining companies. Therefore, the low-priced mining machines sold by miners due to "surrender" will become one of the important resources for the expansion of large mining companies.
As for the current plunge in Bitcoin, which has caused the price to continue to approach the "shutdown price" of small mining companies, it is worth thinking about whether it is related to the desire of large mining companies to acquire these second-hand mining machines.
