March 28, 2024

Bitcoin mining cost is the most reliable support level

As cryptocurrencies decline, the most pressing question becomes the level of exceptional support,below which the price cannot fall. For Bitcoin, this role is played by the cost of production.

The cost of Bitcoin mining is inextricably linked withthe complexity of calculations and the number of participants: the more miners, the higher the complexity and the greater the total power of the network. Due to the mining craze, the hash rate reached 171 exaches / sec in May, but the subsequent overclocking of crypto miners in China led to the collapse of the indicator by almost half.
Cost of Bitcoin mining – the most reliable level of support

Image source: bitinfocharts.com

China's crackdown continues inattitude of the cryptocurrency community. In late May, the government banned commercial banks and financial institutions from clearing and settling cryptocurrencies, and last week the Sichuan Provincial Energy Bureau issued a demand to close about 26 of the largest mining centers by June 20. According to the University of Cambridge, Sichuan accounts for about a third of China's Bitcoin hashrate, or 15% of the world's total power. The ban on mining and operations in cryptocurrencies has led to a drop in prices by 50% from the April highs.
Cost of Bitcoin mining – the most reliable level of support

Image Source: Stor Cryptocurrency ExchangemGain

Repression also influenced the fall in production costsmining, which is inextricably linked to computational complexity. As Capriole CEO Charles Edwards notes, the cost of production rarely intersects with the price, but if it does, it leads to another bull run.
Cost of Bitcoin mining – the most reliable level of support

Image source: twitter.com/caprioleio

Now the cost of Bitcoin is within the limits$ 12 - 21 thousand. This is that exceptional support, below which the coin is trading only for a short time. Due to the Chinese repression, the capacity of the network decreased, which affected the fall in the cost of production. However, Chinese miners have already been invited by the President of El Salvador and the Mayor of Miami, promising support and low tariffs.

As the price is still aheadthe cost of production, Chinese miners will strive to resume work, and Western ones - to increase capacity. Michael Saylor of MicroStrategy, which is one of the largest public holders of BTC, said the crackdown in China is a big stroke of luck for North American miners. In the near future, the hashrate will begin to recover, and the production cost will resume growth.

Analytical group StormGain