Death Spirals and BTC — What Happens When Miners Capitulate?
Joseph Young's original article for cointelegraph.com reduced by 77%
As profitability drops, miners naturally sell their Bitcoin holdings, capitulating as a response to worsening market sentiment. If miners begin to sell off, it creates significant selling pressure in the market. Large mining centers and companies are unlikely to capitulate due to a short-term price slump, as they hold long-term contracts with electricity providers.
"Revenue of $26.7 million; Mining Profit Margin of 58%, and Adjusted EBITDA of $14.7 million. Mined 1,965 Bitcoin at a Cost per Bitcoin of US$4,363 inclusive of electricity costs, mining pool fees, and all other production costs." The decline in Bitcoin's price and the increase in mining difficulty has had a negative effect on the mining profit margins of Hut8 as well as other major mining firms. Still, the tough ecosystem developing before miners could take a toll on smaller firms, especially if BTC falls to the $6,000s, a price range that is below the break-even point for most producers.
Halving won't have an immediate effectOne of the most highly anticipated events of 2020 is the block reward halving of Bitcoin in May. The mechanism, which gets triggered once every four years, would effectively drop the compensation miners receive for mining blocks that contain BTC transactions by half.
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Summarised crypto news.