The BTC miner death spiral has been canceled as the hash rate set a new all-time high of 125 million TH/s as we are reading more in the upcoming Bitcoin news.
A strong pullback occurred in March and May which sparked fears of the start of a miner’s exodus. The data shows the Bitcoin network is stronger than ever. Despite Bitcoin’s range-bound performance, the network hash rate continues to show strength which is an indicator of high confidence from the miners. However, around the time of the halving, some of the industry executives raised concerns that the drop in block rewards from 12 BTC to 6.25 BTC will lead to a huge collapse on the network because of the unprofitable miners, switched off their rigs.
Digital Asset Manager at Caprioleio, Charles Edwards warned of the multiple factors including rising production costs and the stagnating price which could trigger a new miner’s capitulation. This will be problematic for the network and will be the biggest issue in the Bitcoin halving history. Production cost will double to $14,000 which is an increase of 70% from the current price. The last halving, the price was under 10% and Price & HR dropped by -20%. Without the FOMO, we could expect a big miner capitulation of 30%+.
Following the halving on May 11, 2020, the hash rate dropped by 25% from the 122 million TH/s to 91 million THs. However. Rather than continuing the BTC miner death spiral, it bottomed in May, leading to recovery. The director of Business Development at KrakenFX, Dan Held commented that the miner capitulation fears were ill-founded. He even joked about the terminology that is inherently FUD inducing:
“sPiraLs are the favorite doomsday word of economists 😉 Ex: dEfLatIoNaRy sPiRaLs“
Bitcoin hash rate just set a new all-time time high.
The Bitcoin halving was 63 days ago.
Miner "Death spiral" FUD debunked yet again.
— Dan Held (@danheld) July 13, 2020
As the Bitcoin hash rate reached an all=time high, the expectations are that the network difficulty with follow suit. Mining network difficulty will increase so that the homeostatic level of the block that is produced every 10 minutes is maintained. Right now, the network difficulty is set at 15.8t which is below the all-time high of 16.5t. The Bitcoin mining pool BTC.com estimated that the network difficulty will jump to 17t, surpassing the previous all-time high. The effect is magnified if you take into account the scale of operations that are dominating the Bitcoin mining:
“This difference is twice in the case of market-leading Antminer machines from Bitmain, where Antminer S19 has twice the hashrate of its predecessor Antminer S17. Furthermore, larger bulk orders from industrial-scale data centers, which have been cycling out their older machine models, have catalyzed this process.”
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