Bitcoin miner capitulation could potentially be in sight should the Bitcoin price crash further, with miners already experiencing a tough Q3
| |
The current Q3 picture (not looking pretty for the miners) Low hash rate and soaring energy prices has made it a very tough Q3 for Bitcoin miners. The latest Q3 mining report from Hashrate Index has highlighted several factors that have led to a significantly lower hash price and higher cost to produce 1 BTC. *Hash price is the measurement used to determine the market value per unit of hashing power, and is influenced by changes in mining difficulty and the price of BTC. Q3’s average hashprice was $92.70/day vs. Q2’s average of $141.20/day (-34%) Besides the fall from Q2 to Q3, the average hashprice has been falling 5% through Q3. Soaring costs, declining profits American miners have had to contend with the average cost of industrial electricity increasing 25% from $75.20 a megawatt hour to $94.30 per megawatt hour. With power costs swelling and hashprice crumbling, the cost to produce 1 BTC has risen drastically since last year – heavily hitting the profits of mining companies. Mine High, Sell Low With debt becoming more expensive and harder to come by, cash-strapped miners continued liquidating BTC treasuries in Q3 to keep production going. However, for the first time since May, public miners sold fewer BTC than their monthly production in both August and September. Is miner capitulation next? Hashrate Index cautioned that Q3 could be a precursor for more tough times for the mining industry with the potential for further distressed asset sales, bankruptcies and miner capitulation as the year comes to a close. With the combination of the geopolitical conflict in Russia, a hawkish Fed and a depressed market – it is certainly not outside the realms of possibility that a toxic combination of energy prices continuing to soar and Bitcoin price potentially dropping below its previous low could lead to miner capitulation. The doomsday situation would be Bitcoin prices dropping even further, forcing miners off the network as it becomes no longer profitable to mine, and these miners selling the reserve bitcoins – leading to a race to the bottom and causing the price to drop further. Author's note: This post might be a pessimistic read, but please note this is a doomsday/worst-case prediction which might very well not happen at all. If anything, I hope some people learnt something about miner capitulation from this post. Source: https://hashrateindex.com/blog/hashrate-index-q3-2022-report-gradually-then-suddenly/ https://cointelegraph.com/news/low-hash-price-soaring-energy-costs-spell-tough-q3-for-bitcoin-miners submitted by /u/Every_Hunt_160 |
