“Price doesn’t follow hashrate, and never did,” Christopher Bendiksen on Miners Leaving Bitcoin

By Anjali Tyagi
Published November 30, 2018 Updated November 30, 2018
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“Price doesn’t follow hashrate, and never did,” Christopher Bendiksen on Miners Leaving Bitcoin

By Anjali Tyagi
Published November 30, 2018 Updated November 30, 2018

The latest report by CoinShares points out several Bitcoin mining facts covering if bitcoin miners are really making an exit from the market, mining profitability, and hash rate. It also shares that mining is not really a threat to the environment and that it doesn’t consume a huge amount of energy, at least not as much as an Xbox One.

One of the Cleanest Industries on the Planet, Predominantly Powered by Renewables

“Bitcoin isn’t dead. Not this time nor the 326 times before,” says Christopher Bendiksen, the head of Research at CoinShares in his latest blog talking about different dynamics covering Bitcoin price, hash rate, and mining network.

First of all, Bitcoin mining has been considered an environmental hazard. Being energy intensive, it has been cautioned that it can’t be ignored as it poses threat to the environment. However, according to the latest research by CoinShares, crypto products, and research company, Bitcoin mining is not as harmful as it has been made to believe. It is rather,

“By inference, that makes bitcoin mining one of the cleanest industries on the planet, a far cry from the dubious claims put forward by less researched, and more opinion-based sources.”

Bendiksen took to Twitter to share,


The use of energy in Bitcoin mining isn’t really much of consequence as he states,

“…the combined power draw of global PS4, Xbox One and Wii U units running four hours a day (4.9 GW) is higher than that of the entire #bitcoin mining network (4.7 GW).”

Price doesn’t follow Hash Rate, It’s the Other Way Around

In his post, Bendiksen clarified the fact that the Bitcoin miners are shutting down their hardware and making an exit but he says, ”this is not going to cause a “death spiral.”

There are basically two cutoff levels for prices that matter for bitcoin miners, the first one is the all-in ROI (Return on Investment) breakeven. Above this level, profit is made on investment while below this loss is incurred. Cash-cost breakeven is the second one, above this level, the cash flow is positive but potentially loss-making but below this means mining gears are likely to be shut down depending on risk appetite, industry view, and capital levels.

“We are currently near the cash cost level and the recent drop in hashrate suggests that we’ve been above it during the recent price fall, causing a significant amount of mining gear to be removed from the network.”

As for the hash rate, it lags price increases but responds much quicker to the price decreases. “…price doesn’t follow hash rate, and never did,” says Bendiksen before adding, “It’s the other way around as only increased prices can pay for additional hash power.”

The report further puts the estimate creation cost to about $6,800 (an increase of $300 from June’s $6,500 when BTC price was $8,500), when current bitcoin price is about $4,000. This means,

“Many miners are currently feeling the squeeze, with inefficient mining gear and high-cost electricity miners likely to be forced off the network.”

Some miners are struggling for sure, the post went to say as the gear is running below cash cost meaning they are “being shut off.”

However, it doesn’t mean the end of mining as difficulty resets to a lower level. Also, the all-in cost of mining falls to a level where it is yet again below bitcoin price.


The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.
About Author
Anjali Tyagi
440 Articles
Having a background in writing, I worked on a wide array of industry topics and have recently entered the world of Blockchain and Cryptocurrency.