Bitcoin (BTC) miners are ready and well prepared in case the market drops once again. According to data shared by cryptocurrency analyst VentureFounder on Twitter, Bitcoin is currently not at risk of falling below production costs. That means that miners are not at risk of capitulation in the near future.
Bitcoin Miners are Well Prepared for a Price Drop
The cryptocurrency market is quite volatile. We know that there are moments in which the price of a digital currency could move higher or lower without nobody expecting it. That means that miners should be ready to face a possible price drop in the crypto market. According to VentureFounder, the risk for miner capitulation right now stands at $34,000, close to 20% below current prices.
Moreover, the analyst showed additional information about the moments in which there was a miner capitulation. These capitulations took place during the bear market of 2018 (in December) and early 2019, in March 2020 with the Coronavirus sell-off and during the recovery phase that started in 2020.
At the moment, the production cost of mining Bitcoin is $34,000, which means that it would be possible for miners to experience a price decrease without damaging their position in the market.
Bitcoin’s production cost takes into consideration the electricity consumption that is used to secure the network and be rewarded with BTC. According to Charles Edwards, the Founder of Capriole Investments, Bitcoin’s production cost can be used to estimate Miner profitability.
Bitcoin’s hash rate has been growing over the last three years. It reached an all-time high a few weeks ago close to 183.056m TH/s according to data shared by Blockchain.com. This shows that Bitcoin has recovered after the recent hash rate drop that took place when China decided to ban mining activities in the country.
Despite this being considered negative for the whole network, when it comes to decentralization it has been a very important thing. Indeed, the whole Bitcoin network is now more decentralized and miners are located in new countries rather than focused in China. In this way, it is possible for the Bitcoin network to become more secure and avoid possible single-point failures.
Bitcoin is now being traded close to $43,300 and it has a market capitalization of $820 billion at the time of writing. However, the coin could fall down to $34,000 and it would still be profitable to mine Bitcoin. That makes the network more secure from attacks and other possible issues.