Bitcoin Mining Fees Drop, Why Is Bitcoin Price Depressing Potentially?
The fact is that the cost of mining Bitcoin continues to
decline, a.k.a cheaper, but according to Nikolaos Panigirtzoglou from JPMorgan,
it has the potential to push the price of Bitcoin down again. Robby, the
Director of Accountku.com somewhat agrees with that opinion.
“Bitcoin production costs have fallen from around $24,000
in early June to around $13,000 today. Although it can be interpreted that
Bitcoin miners have the potential to be reluctant to sell their BTC, the
opposite can happen,” Panigirtzoglou told Bloomberg, Thursday (14/7/2022).
In general, Bitcoin mining fees (daily basis), are
calculated by comparing the amount of electricity consumption to mine Bitcoin
with the amount of BTC mined.
When mining fees are lower than the Bitcoin price, more miners
tend to work again. On the other hand, if the mining costs are higher than the
miners' income, the number of miners will tend to decrease.
However, based on historical data, as attached by
JPMorgan, what happens is the opposite, that low BTC mining costs will actually
create selling pressure for Bitcoin by miners, because miners will tend to cover
losses previously experienced.
From the graph presented by JPMorgan, in June 2021, therate of production costs dropped dramatically, which was then followed by a
decline in the price of Bitcoin. Although then the next few months, it
reversed, the previous trend occurred in June 2022, where the cost of producing
Bitcoin has dropped from around US$24,000 in early June to around US$13,000
nowaday.
Even from another source, MacroMicro, as of July 13,
2022, the current production cost of BTC is US$23,764. Meanwhile, on July 15,
2022, it fell to US$20,632.
According to Panigirtzoglou, the decline in production
costs was due to some large miners using much more efficient crypto mining equipment,
i.e., that is more energy efficient, but able to mine more Bitcoins. This
relative advantage is not possessed by several other small miners who must be
willing to extinguish their mining equipment, after selling their mining products.
Mining Bitcoin and Selling Trends
“Generally, lower production costs help increase miners'
profits and potentially reduce selling pressure by them. However, by other
market participants, it is considered the opposite, as well as to investigate
the next support level in the bear market era. We project that the production
cost of BTC could drop to US$13,000,” he said.
Robby, Director of Accountku.com, agrees with JPMorgan's
opinion. He said that due to low production costs plus a lower hashrate, the
cost to mine 1 BTC is lower, so miners can sell their produce cheaply.
“If the cost goes down, the hashrate goes down, so the
chances of getting BTC are higher. And then if production costs go down, but
the hashrate goes up, the price of BTC tends to go up," added Robby to
Blockchain media, Friday (15/7/2022).
BTC Selling Pressure by Miners
On the other hand, the selling pressure of BTC by miners
is inevitable, because the cost of mining Bitcoin is higher than the selling
price of BTC in the market. To overcome this, some miners have to sell it.
Mining company Core Scientific, for example, announced on
July 7, 2022, that it had sold BTC worth US$165 million equivalent to Rp.
During June, the company listed on the NASDAQ stock
exchange sold 7,202 BTC at an average price of US$23 thousand. Core
Scientific's BTC deposit now has 1,959 BTC left.
Regarding the use of more efficient mining equipment, yesterday Cleanspark purchased 1,061 units of Whatsminer M30S. That many units is equivalent to 93 petahash per second (PH/s). Previously, they bought 1,800 units of Antminer S19 XP.
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