During the ‘Black Thursday’ crash in Bitcoin, the price dropped by 50% effectively replicating post halving rewards. The fear of a pullback to the lows again saw considerable capitulation among miners. The lows in the Hash rate was 81 EH/s.
While recovery in hash rate was seen in April, the total hash rate is back in the 90-120 EH/s again. Moreover, a return back to Nov-Dec 19 levels (around 80-100 EH/s) is also likely.
Hashrate Follows Price
Bitcoin hash-ribbons (30 and 60 day average) signaled a buy signal as the capitulation leading to accumulation lead the break-out in the last week of April. However, with halving due in the next 11 days, miners might be looking at $9000 as a good place to buy Bitcoin shorts or put options. Moreover, capitulation is likely to ensue again after halving. Due to the reduction in reward by 50%, older generation of S9 miners are likely to phase out post halving.
As reported earlier on Coingape, the rainy season in China brings abundance of cheap hydroelectric power. Then the cost of electricity is likely around $0.03-$0.04. A Russia-based miner hosting firm BitRiver executive told the media,
“After halving, we believe that the price range of 3 to 4 cents [USD] KWh is sufficient to continue mining profitably with S9 miners if the current price movement continues.”
However, according to analytics by F2Pool, with the price around $8500-$9000, the older generation of miners are nearly at break-even cost at the current prices. Moreover, they are likely to incur loss after Bitcoin halving. For larger systems, there might be some increase in profitability due to economies of scale, but addition of maintenance cost and rent is also accountable.
Nevertheless, over the last year, the up-gradation to the newer models had already begun. Even during the recent crash, the lowest mining level was near 81 EH/s. However, there was a quick recovery in price after the crash in March, while the reduction in rewards from 12.5 to 6.25 BTC will be constant. Also, post halving, there will be a 30% reduction in the sell pressure on Bitcoins.Hence, in the beginning, miner capitulations can lead to short term bearishness, but will be an overall bullish event.
Do you think price will rise to support older generations of miners as well? Please share your views with us.