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Sales by miners unlikely - Bitcoin mining profitable despite weak prices

 


The production costs for mining are 34,000 US dollars and therefore still offer the miners a lot of breathing room despite weak prices.


Despite weak prices, Bitcoin ( BTC ) mining is currently more profitable than ever, which makes further pressure to sell all the more unlikely.


As Twitter account @venturefounder noted in this regard on Jan. 14, at $42,000, BTC/USD is still nearly 20% above the average production cost of “mining” the market-leading cryptocurrency.


No surrender, no downturn

Although BTC is now back $27,000 off the applicable record high, mining is more attractive than ever. It is therefore hardly surprising that the hash rate , i.e. the computing power of Bitcoin made available by the miners, reached a new record this week .


While some naysayers fear that further losses could prompt miners to give up, a simple calculation takes the wind out of their sails.


For example, Charles Edwards, the CEO of asset management company Capriole, calculated using the "production cost indicator" for Bitcoin mining that the breakeven point for miners is currently just $34,000.


“The really bad downturns only happen when miners are forced to capitulate (like in December 2018 or March 2020). As soon as the Bitcoin price slips below the production costs, miners are usually forced to give up," Edwards explains. To which he adds:


“For example, in May, BTC was under threat of capitulation when it was at $30,000, but right now production costs are at $34,000, which is still well below the current price.”



So the miners operate profitably because their costs are lower than the possible return, so there is no reason for them to sell or even capitulate.


In a 2019 blog post, Edwards also pointed out that miners are also credited with transaction fees, giving them another cushion to maintain profitability.


"Historically, the energy expenditure or the electricity costs for mining are the minimum price of Bitcoin," as he explained at the time.


Miners defy the weak courses

Indeed, as Cointelegraph reported, despite the weak price, miners are far from hitting the sack.


Rather than mass selling , miners are hoarding their BTC, suggesting their long-term optimism.


Even the macroeconomic difficulties that are on the horizon have not dragged the mining industry down noticeably so far.


However, even the most pessimistic forecasts do not assume that BTC will slip below $30,000 in the near future, which makes the risk for the miners all the more calculable. 

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