Bitcoin miners may take another 20% drop in BTC price before capitulating, data shows –

Bitcoin (BTC) mining activity is higher than ever at current price levels, and new data shows just how unlikely a miner sell-off really is.

Like Noted per popular Twitter account @venturefounder on Jan 14, even at $42,000, the BTC/USD trading pair is around 20% above the cost price of miners.

The miners’ capitulation behind the “worst” BTC price declines

Despite falling $27,000 below all-time highs, BTC is more attractive to miners than ever. Hash rate, an estimate of the total processing power dedicated to mining, hit new all-time highs this week.

Those who feared that a further drop in BTC prices would pressure miners to sell, received fresh assurances via data covering how much BTC/USD would need to trade for them to hit the threshold. profitability.

Referring to the BTC production cost indicator of Charles Edwards, CEO of asset manager Capriole, the founder revealed that the break-even point currently stands at $34,000.

“Worst dumps Bitcoin has ever had was due to miner capitulation (Dec 2018, Mar 2020), when BTC fell below production costs it risks miner capitulation,” he added in comments.

“BTC risked miner capitulation at $30,000 in May. The current production cost is $34,000, which is 20% lower than the current price.”

Annotated table of Bitcoin production costs (screenshot). Source: @venturefounder/Twitter

As such, there is no reason for miners to sell on the profitability – as well as future prospects – of their operations.

In a medium Publish About his 2019 indicator, Edwards further noted that transaction fees granted to miners give them an additional cushion against spot price incursions below the cost of production.

“Historically, the electrical cost to produce one bitcoin has represented a floor in the bitcoin market price,” another preview read.

Mining Sector Ignoring Spot Price Movements This Year

As TBEN reported, miners are indeed voting with their wallets as BTC consolidates below $50,000.

Related: The Bitcoin Cycle Is Far From Over And Miners Are Here For The Long Term: Loyalty Report

Rather than sell, miners en masse have accumulated more BTC this month and last only during highs.

This shows both a healthy balance sheet and a determination for the future – fears of economic difficulties on the horizon are not currently weighing on the mining sector.

Bitcoin hash rate chart. Source: Blockchain

Going forward, current worst-case scenario estimates among well-known analysts predict a floor price of BTC no lower than $30,000.

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