Bitcoin News Today – Headlines for December 8

  • Bitcoin finds it difficult to break over key resistance levels
  • Why miner capitulation happens
  • Big mining firms are having a difficult time

Bitcoin News Today – The digital currency market has been relatively stagnant over the past few days. This has put the price of Bitcoin (BTC) at risk of further decline. Bitcoin has been struggling to recover beyond key hurdle points. A price plunge increases the chances of the so-called ‘miner capitulation’ happening, which is said to be the fundamental reason why BTC plunged in December last year.

In 2018, Bitcoin plunged to around $6k after three months of stability in a tight range between $6k and $6,500. The subsequent dip to the $3k zone occurred within the space of one month. The downtrend was drastic and BTC remained at that level until the New Year.

Why Does Miner Capitulation Happen?

Miner capitulation happens in the BTC market when mining is no longer profitable. As the profit of mining reduces, miners often dump their BTC holdings, capitulating due to the worsening market sentiment. The continual sell-off by miners create significant selling pressure in the market, which creates a difficult environment for top digital currencies such as BTC to maintain their momentum.

Bitcoin (BTC) Price Today – BTC / USD

NamePrice24H %
bitcoin
Bitcoin(BTC)
$10,724.07
0.080%

Big mining firms and centers are unlikely to follow the trend because of a short-term price dump, as they hold long-term contracts with electricity providers. They are also capable of dealing with instability in the market for a long period of time, as they have more capital. Meanwhile, smaller, short-term miners are likely to capitulate.

Will Bitcoin Network’s Hashrate Drop to Near-Zero?

Major mining companies shutting down one after the other could result in a death spiral in which the hashrate of BTC’s network drops to near-zero. Nevertheless, as Andreas Antonpoulos – security and digital currency researcher – previously said, abrupt drop or death spiral that would lead to the hashrate of BTC’s network to drop to near-zero is not likely to occur. This is because miners operate with long-term strategy and perspective.

Large Mining Firms Are Having a Difficult Time

The break-even price of BTC mining is estimated to be around $4,100 to $4,500. Miner Hut8, a Canadian-based mining giant, said that it mined BTC at a cost of $4,300 all through the third quarter of this year. The firm said:

“Revenue of $26.7 million; Mining Profit Margin of 58%, and Adjusted EBITDA of $14.7 million. Mined 1,965 Bitcoin at a Cost per Bitcoin of US$4,363 inclusive of electricity costs, mining pool fees, and all other production costs.”

Nevertheless, Ceteris Paribus – crypto researcher – pointed out that the cost of mining that Miner Hut8 calculated ‘leaves out depreciation, net finance expenses, and other expenses,’ which could increase the actual mining cost to $7,100.

Princess Ogono is a writer, lawyer and fitness enthusiast. She believes cryptocurrencies are the future. When she's not writing, she spends time with her adorable cat, Ginger and works out often.

LEAVE A REPLY

Please enter your comment!
Please enter your name here

This site uses Akismet to reduce spam. Learn how your comment data is processed.