Bitcoin Price Prediction
Bitcoin Price Prediction, As cryptocurrency prices reach new lows and the increasing cost of energy continues to eat into profitability, bitcoin miners are easing off the gas pedal and dialing back production.
According to Blockchain.com, the Bitcoin hash rate—a measure of how much computing power is used to create new coins—has dropped 5.4 percent since June 12, when the price of Bitcoin plummeted below $25,000 for the first time. Meanwhile, according to computing magazine Tom’s Hardware, the price of graphics processors, which supply the computational power required to manufacture new bitcoin units, declined by an average of 15% in May, indicating that miners are unloading their chips on the secondary market.
The fall in hash rate and growing availability of GPUs suggest that some bitcoin miners may be abandoning the business, seeing the large energy expenditures for a very little reward no longer worthwhile.
In a letter published on Friday, Yuya Hasegawa, a crypto market analyst at bitbank, said, “Supply and demand for bitcoin mining has not been supporting the price this year.”
Bitcoin’s competitiveness has risen
Mining Bitcoin has become much more competitive, with the Bitcoin hash rate reaching an all-time high on June 12. With more individuals mining Bitcoin, creating a coin becomes more difficult—and consumes more energy. However, just as the difficulty reaches its pinnacle, the coin’s value plummets. According to Hasegawa, in order to break out of this scenario, either the difficulty must decrease or the price must increase considerably.
“If the current situation persists, miners will likely sell their Bitcoins as the price rises, slowing the rate of price recovery and maybe putting Bitcoin in a range-bound move for a time,” he cautions. Bitcoin Price Prediction
Is there a new hash-crash on the horizon?
According to Blockchain.com, total revenues given to miners have dropped to their lowest level in nearly a year, and the stock prices of listed miners Marathon Digital and Hut 8 Mining have both dropped 41% in the last month.
“It’s not fun to be in the mining business right now,” Alexander Neumueller, the Cambridge Centre for Alternative Finance’s digital assets project lead, told the Financial Times.
The steep decline in Bitcoin’s price is certainly to blame for the drop in revenue. While Bitcoin is back above $21,000 following a Thursday night rally, the coin’s value has been creeping closer to $20,000 since the beginning of the week. The coin’s value has plummeted by more than 70% since its all-time peak in November 2021, and its total market value has dropped from $3.2 trillion to just under $1 trillion today.
However, while Bitcoin prices have dropped to new lows, energy prices have reached new highs, putting miners in a bind in two ways: high costs and lower revenue per Bitcoin generated.
Didar Bekbaouov, a Kazakh miner and cofounder of mining startup Xive, told the Financial Times that he was “adapting to new prices and reality,” and that he had stopped mining once Bitcoin went below $25,000.
Meanwhile, Hut 8, which stated in its annual report for 2021 that “the only seasonality that the Company experiences is related to potential changes in electricity prices based on volatility in market natural gas prices,” told the Financial Times that it has been preparing for this day and has built up a storage of “unencumbered bitcoins” to use for acquisitions on that day.
Bitcoin mining in the midst of a power outage
As countries like Germany urge citizens to conserve energy as gas prices rise due to Russia’s war in Ukraine, the cost of mining an alternative currency like Bitcoin—which consumes an estimated 15GW of electricity per day, according to research from the Cambridge Centre for Alternative Finance—has some questioning whether it is truly necessary.
The Swedish central bank, Riksbank, issued a study on June 10 advocating for a Bitcoin ban, claiming that “recently, some crypto asset extraction has been developed in northern Sweden, where it consumes as much electricity as 200,000 homes do on an annual basis,” according to the report. Bitcoin Price Prediction