Bitcoin miners can take fresh 20% BTC price hit before capitulating, data shows

At current price levels, the Bitcoin (BTC), mining business is larger than ever. New data also shows how unlikely it is for a mass-miner sale to occur.

Popular Twitter account @venturefounder noted that the BTC/USD trading pair is about 20% higher than miners’ cost price at $42,000.

Miner capitulation behind “worst” BTC price dips

BTC remains attractive to miners despite falling $27,000 below its all-time highs. The hash rate, which is an estimate of total mining power, hit new highs this week.

Concerned that a new BTC price drop could force miners to sell, they received data detailing how much BTC/USD they should trade at in order to break even.

Venturefounder, Charles Edwards, CEO, Asset Manager Capriole, revealed that the current breakeven point is $34,000.

He added that “the worst Bitcoin dumps ever had been due to miners caitulation (December 2018, February 2020), when BTC dropped below production costs, it was at risk of miner capitulation.”

“BTC was at high risk of miner capitulation at $30k per month in May.” Current production costs are $34k, 20% lower than the current price.

Screenshot: Annotated chart showing the cost of producing Bitcoins (screenshot). Source: @venturefounder/Twitter

Miners have no incentive to sell due to their future prospects and profitability.

Edwards also noted in a Medium post that miners are protected against spot price incursions at a lower production cost by paying transaction fees.

Another insight says that “Historically, the electricity cost to produce Bitcoins has represented a price floor for the Bitcoin market price.”

This year, mining shrugs off spot price movements

Cointelegraph reported that miners vote with their wallets when BTC consolidates below $50,000.

Related: The Bitcoin cycle is not over, and miners are still in it for long-term: Fidelity report

Instead of selling, miners have been accumulating BTC in greater numbers this month than they did during the highs.

This speaks to both a healthy balance sheet as well as a resolve over the future. Currently, fears about economic problems on the horizon do not affect the mining sector.

Chart of the Bitcoin hash rate. Source: Blockchain

According to well-known analysts, the worst-case scenario for Bitcoin is no lower than $30,000.

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Eileen Wilson

Eileen Wilson –Technology and Energy My Name is Eileen Wilson with more than 5 years of experience in the Stock market industry, I am energetic about Technology news, started my career as an author then, later climbing my way up towards success into senior positions. I can consider myself as the backbone behind the success and growth of topmagazinewire.com with a dream to expand the reach out of the industry on a global scale. I am also a contributor and an editor of the Technology and Energy category. I experienced a critical analysis of companies and extracted the most noteworthy information for our vibrant investor network.

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