Bitcoin: Miners Running Out of Steam - Price Increase Ahead?

The news about Bitcoin never ceases to surprise, and this time, the spotlight turns to a rare but worrying economic anomaly. The “miner price” of Bitcoin, a crucial indicator for cryptocurrency enthusiasts, has fallen below the electrical cost necessary to mine a BTC. A first in a long time, but what does this really mean?

Bitcoin Mining: The price falls below the electrical cost, an unprecedented situation?

Is JPMorgan right in making bleak predictions in April? Indeed, Charles Edwards, founder of Capriole Investments, recently highlighted this alarming situation on X. For the fifth time in Bitcoin’s history, miners’ revenues no longer cover their electrical costs. Despite the inherent fluctuations in this market, this trend could signal tough times for BTC miners, potentially dampening investor sentiment, according to Bitcoinist.

To understand this financial muddle, one must first grasp the two main concerned indicators: the electricity cost and the miner price. The former, as its name suggests, represents the daily electricity expenses miners must pay to extract a single BTC. The latter, the miner price, is an estimate of the revenue a miner can expect to earn from mining one Bitcoin. These revenues come from block rewards and transaction fees. The former are fixed, paid in BTC for each validated block, while the latter vary depending on network activity.

In periods of low traffic, transaction fees remain modest, since users do not need to pay substantial amounts to have their transactions processed quickly. Conversely, in periods of high congestion, fees skyrocket, as only the highest payments are processed with priority. Herein lies the crux: the miner price, taking into account the overall revenue generated by a BTC, includes these transaction fees.

Miners, already at the mercy of the cryptosphere’s whims, now have to juggle with insufficient revenues to cover their basic costs. If this situation persists, it might push the less resilient ones to throw in the towel, thereby reducing the overall computing power of the Bitcoin network. Such a development could have major repercussions on the entire ecosystem, far beyond the immediate concerns of the miners.

The miners’ distress, a prelude to a new surge?

Thus, the BTC miner price has fallen below the electricity cost necessary for its extraction. A situation that plunges these shadow workers into deep economic distress. According to the chart below, every time this anomaly occurred, the crypto star jumped like a hyperactive kangaroo.

With the price of Bitcoin currently hovering around $66,200, after a heavy drop last week, all eyes are on the future.

The big question: Will Bitcoin repeat its feat and soar again, or will miners this time really have to tighten their belts?