Bitcoin prices have fallen so low that cryptocurrency miners have become sellers, putting further pressure on the already depressed market. Recent data shows an increase in the amount of bitcoin moved by miners from the mining pool to crypto exchanges in June, as the price of the cryptocurrency rose from $30,000 to $20,000, according to CryptoQuant. The event, known as the “miners’ capitulation”, involves miners preparing to sell their bitcoin – likely to cover mining expenses or make bigger gains by selling at a price they consider overvalued. . “Given rising electricity costs and the steep drop in bitcoin prices, the cost of mining a bitcoin may be higher than its price for some miners,” the Citi analyst said Tuesday. Joseph Ayoub in a note. “With high-profile reports of mining company quits, as well as miners using their equipment as collateral to borrow money, the bitcoin mining industry may come under increasing pressure.” If bitcoin prices remain below average mining costs, miners who don’t sell to fund their operations could be forced to suspend or terminate them, which could ultimately lead to weaker security across the board. bitcoin network. Ayoub noted, however, that there is no evidence yet of the miners being shut down. The miners’ capitulation is also a historical indicator that the market has entered lower territory, said CryptoQuant’s Julio Moreno. Bitcoin fell to a low of $17,598.05 in June, according to CoinMetrics. It was trading at around $20,000 on Wednesday, more than 70% below its all-time high in November. Less Mining, Weaker Security Miners selling their bitcoin could continue to be a source of selling pressure if bitcoin prices stay this low. However, other miners could be forced to suspend or terminate their operations, which could lead to lower network hashrate and ultimately weaker network security. Ayoub noted that the hashrate remains stable at the moment. Hashrate measures the computing power used by the Bitcoin network to process transactions and is a key indicator of network health. “The decrease in hashrate reduces the security of the Bitcoin network,” Ayoub said. “The lower the hashrate, the lower the computing power needed to control the hashing power of the network. transactions, reverse transactions and double-spend currency.” In June, several publicly traded mining companies lowered their hashrate growth targets “out of necessity and to preserve capital,” JPMorgan analyst Kenneth Worthington said in a note Wednesday. “Bitcoin has fallen to levels last seen in December 2020 and operators running older (less efficient) mining hardware have reduced their operations,” he said. “Our basket of thirteen US-listed bitcoin miners had an aggregate market capitalization of approximately $3.7 billion as of Thursday, June 30 (down approximately 45% for the month of June).
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