web analytics
TOP Online Casinos That Accept Cryptocurrencies
1st Deposit Bonus:
1 BTC
Bonus for New Players
100% MATCH BONUS
5.0 rating
5.0
1st Deposit Bonus:
2 BTC
Bonus for New Players
100% MATCH BONUS
4.5 rating
4.5
No Deposit:
1.5 mBTC FREE
Exclusive Offer
Claim Free Crypto!.
4.0 rating
4.0

Bitcoin Mining Difficulty Indicates that Miners Could get “rekt badly” – Analyst

bitcoin miners could get rekt

  • Bitcoin Mining Difficulty dropped by 7% – the highest drop after a continual rise in 2019.
  • New age miners and the halving due in May next year are making things difficult for existing miners.
  • Crypto-analyst, Dovey Wan tweets about the possibility of miners getting “rekt price does not double.”

Bitcoin has had a dominant bull run during Q2 and Q3 of 2019. The price of BTC was well above the break-even cost of mining around $5600-$7000.

Nevertheless, while the miners are still making a profit at current prices, the future seems highly uncertain for them.

 

bitcoin mining difficulty
Bitcoin [BTC] Mining Difficulty of the Network (Source)

The network is witnessing a capitulation of old miners due to halving and competition from newer miners. Dovey Wan, a crypto-analyst with insights and sources from Chinese miners tweeted,

Bitcoin difficulty sees a major drop first time in 2019, abt 7%

Mainly due to price as lower end rig has shut down, partially due to end of raining szn, when cheaper excessive hydro is no longer widely available

Many miners will rekt badly if price does not double in halving

Current Price Depressing for both New and Old Miners

As halving comes closer, the old miners stand the risk of making taking considerable losses as the price is close to break-even cost currently. Moreover, the newer miners are far more efficient and powerful, eliminating the older miners in large numbers.

Wan also noted that ‘assuming a per hour electricity cost of $0.05 Kwh, the cost of mining 1 BTC on S9 (current) is ~$7000, S17/M20S (new miners) is $3000‘. Hence, a massive shift in the ecosystem seems inevitable.

Moreover, while older miners face profitability issues, new investors have to cover their capital costs and depreciation of miners. Wan noted that “the static payback/break-even for Capex now is over 300 days.” In the current technological environment, a generation of miners lasts only about 3-5 years. Hence, 2020 poses severe risks to the mining business in terms of profitability.

Expert Analyst Suggests Price Should Rise

Expert on-chain crypto analyst, Willy Woo, has charted the effect of changes mining ecosystem on the price of Bitcoin. The mining difficulty ribbon on moving averages had been compressed for a reasonable amount of time.

mining difficulty ribbon
Mining Difficulty Ribbon (Source: Woobull)

As the weaker miners begin to capitulate, the selling pressure in the market will be reduced. This will effectively increase the price. Moreover, with the increase in price, new miners will be able to cover their cost of depreciation as well.

Nevertheless, the volatility and the risk of global regulations on Bitcoin is tremendous. Hence, if the price does not make a bullish move and bears continue to push the price lower, the miners will stand to face huge losses. They will be closely watching the price action and try to cover their risk soon.

Do you think that the price will support the mining ecosystem, or they will have to bear the cost and stand the risk of shutting down? Please share your views with us. 

The post Bitcoin Mining Difficulty Indicates that Miners Could get “rekt badly” – Analyst appeared first on Coingape.



Source: Bitcoin Mining Difficulty Indicates that Miners Could get “rekt badly” – Analyst

Leave a Reply

Your email address will not be published. Required fields are marked *

NOT REQUIRED
Bonus Code
Get 25 FREE SPINS on Book of Dead
NOT REQUIRED
Bonus Code
1.5 mBTC FREE
Valid Until: Dec 31, 2020
NOT REQUIRED
Bonus Code
100% match bonus based on first deposit of £/$/€20+. Additional bonuses.
Valid Until: Dec 24, 2019
N/A
Bonus Code
100% match bonus based on first deposit of £/$/€20+. Additional bonuses.
Valid Until: Dec 31, 2019