The Bitcoin (BTC) mining business is bigger than ever at current price levels, and new data shows how unlikely a sell-off by miners is.
What he pointed the popular Twitter account @venturefounder on Jan 14, even at $42,000, the BTC/USD trading pair is around 20% above miners cost price.
Miners’ Capitulation Is Behind ‘Worst’ BTC Price Drops
Despite falling $27,000 below all-time highs, BTC is more attractive than ever to miners. The hash rate, an estimate of the total processing power devoted to mining, hit new all-time highs this week.
Those who fear that a further BTC price drop could put pressure on miners to sell have received new assurances through data covering the BTC/USD price so they can break even.
Referencing the BTC cost of production gauge from Charles Edwards, CEO of asset manager Capriole, the firm’s founder revealed that the break-even point currently stands at $34,000.
“The worst drops Bitcoin has ever had were due to miner capitulation (Dec 2018, March 2020), when BTC fell below production costs, it is at risk of miner capitulation,” he added in the comments.
“BTC was at risk of miners capitulating at $30,000 in May. Current production cost is $34,000, 20% below current price.”
As it is, there is no reason for miners to sell thanks to the profitability, as well as the future perspective, of their operations.
In a Medium post about his 2019 indicator, Edwards further noted that the transaction fees given to miners give them an additional cushion against spot price forays below the cost of production.
“Historically, the electrical cost to produce one Bitcoin has represented a price floor in the market price of Bitcoin,” another perspective reads.
Mining shrugs off spot price moves this year
As Cointelegraph reported, miners are voting with their wallets as BTC consolidates below $50,000.
Instead of selling, the miners mass they have been accumulating BTC more this month and last than during the highs.
This speaks to both a healthy balance sheet and resolve about the future, fears of economic hardship on the horizon are not currently weighing on the mining sector.
Looking ahead, worst-case scenario estimates among renowned analysts envision a BTC price floor of no lower than $30,000.