6K psychological level? Avg of 5K is critical for the ecosystem!
Aktualisiert
Let us begin with the article published a few months ago which calculates the average costs per country to mine a Bitcoin:
How much does it cost to mine a Bitcoin?
If we think about the miners and the Bitcoin ecosystem as a whole the question rises - why should you take a huge warehouse, invest funds and know-how in a fully functioning data center with a huge cooling engine and finally mine a virtual currency which is physically not existent:
The believers should not really care about the Bitcoin price, any technical analysis or trading strategies. These people are driven by the idea which will change the way we think about currencies and banks. Literally they just hodl. I guess there are very few people who are not #2, the capitalists. Everybody who trades, who thinks about a lambo or any other thing except the idea of the revolution is a capitalist - let me guess 80-90 %.
With this in mind every single data center as a little mining company has huge maintenance costs (employees, hardware outages, minor problems with their internet providers and so on). Thinking of the electricity costs which you have to pay for every Bitcoin mined you have to operate a small business by paying employees and buffer any failures. Obviously if you invest to mine crypto your break-even is to at least use the mined assets to cover all these costs.
Now back to the article above - I will not take any politically unstable or tropically warm countries into account - we have an average electricity based cost per Bitcoin of 4700 USD (for Iceland, Russia or USA). This is only the electricity... without the warehouse, the hardware, the employees and any other pre-invest.
With our current price of 6300 USD per Bitcoin we are probably extremely close to the red area, where the mined coins cannot effectively sustain the costs of the mining. What does this mean for the ecosystem? Well, If we test the red area we are going to equally test the ecosystem. The deeper we dive the harder we test it. The psychological level of 6K is apparently the area we are not allowed to leave south in order to write black figures.
There are basically two possible paths from here:
1. According to some popular tech. analysis opinions (eg. ToneVays) the correction will hit us harder to around 4.7K levels or even lower. This would mean every data center has to hodl through the downtrend and believe in much higher prices while covering the red numbers out of their own pockets (or prior profits). From the capitalistic view it is quite a huge problem. What happens if we go even lower? Is it cheaper to shut down the data centers until we hit higher prices? A Longterm correction scenario like this would collapse the Bitcoin ecosystem and the bubble pop will hit the 'Despair' phase at prices like 100 USD - pretty pessimistic.
2. Knowing the fundamental facts and the basic requirements to sustain the mining profitability we have to hold the price above approx. 5000 USD even if it means it is going to be artificially pushed north from the 6K support zone. The 6K zone is being retested for the fourth time and should be the current psychological bottom. The market cap is at approx. 200B$ which equals the Nov. 2017. The price should go (or at least be manipulated) sideways from here until the next bull cycle begins (catalysts ETFs, lightning network, etc.).
I think all of the interested people want Bitcoin to happen. A lot of people hold their funds in order to invest in any upcoming bull run and a few people are waiting for the upcoming revolution this coin can trigger. The best thing one can do is to drop all the scam sh**coins which harm the Bitcoin and the crypto ecosystem and invest in BTC.
How much does it cost to mine a Bitcoin?
If we think about the miners and the Bitcoin ecosystem as a whole the question rises - why should you take a huge warehouse, invest funds and know-how in a fully functioning data center with a huge cooling engine and finally mine a virtual currency which is physically not existent:
- on the one hand because you believe in a possible digital fintech revolution
- on the other hand because you are a capitalist driven by possible profits
The believers should not really care about the Bitcoin price, any technical analysis or trading strategies. These people are driven by the idea which will change the way we think about currencies and banks. Literally they just hodl. I guess there are very few people who are not #2, the capitalists. Everybody who trades, who thinks about a lambo or any other thing except the idea of the revolution is a capitalist - let me guess 80-90 %.
With this in mind every single data center as a little mining company has huge maintenance costs (employees, hardware outages, minor problems with their internet providers and so on). Thinking of the electricity costs which you have to pay for every Bitcoin mined you have to operate a small business by paying employees and buffer any failures. Obviously if you invest to mine crypto your break-even is to at least use the mined assets to cover all these costs.
Now back to the article above - I will not take any politically unstable or tropically warm countries into account - we have an average electricity based cost per Bitcoin of 4700 USD (for Iceland, Russia or USA). This is only the electricity... without the warehouse, the hardware, the employees and any other pre-invest.
With our current price of 6300 USD per Bitcoin we are probably extremely close to the red area, where the mined coins cannot effectively sustain the costs of the mining. What does this mean for the ecosystem? Well, If we test the red area we are going to equally test the ecosystem. The deeper we dive the harder we test it. The psychological level of 6K is apparently the area we are not allowed to leave south in order to write black figures.
There are basically two possible paths from here:
1. According to some popular tech. analysis opinions (eg. ToneVays) the correction will hit us harder to around 4.7K levels or even lower. This would mean every data center has to hodl through the downtrend and believe in much higher prices while covering the red numbers out of their own pockets (or prior profits). From the capitalistic view it is quite a huge problem. What happens if we go even lower? Is it cheaper to shut down the data centers until we hit higher prices? A Longterm correction scenario like this would collapse the Bitcoin ecosystem and the bubble pop will hit the 'Despair' phase at prices like 100 USD - pretty pessimistic.
2. Knowing the fundamental facts and the basic requirements to sustain the mining profitability we have to hold the price above approx. 5000 USD even if it means it is going to be artificially pushed north from the 6K support zone. The 6K zone is being retested for the fourth time and should be the current psychological bottom. The market cap is at approx. 200B$ which equals the Nov. 2017. The price should go (or at least be manipulated) sideways from here until the next bull cycle begins (catalysts ETFs, lightning network, etc.).
I think all of the interested people want Bitcoin to happen. A lot of people hold their funds in order to invest in any upcoming bull run and a few people are waiting for the upcoming revolution this coin can trigger. The best thing one can do is to drop all the scam sh**coins which harm the Bitcoin and the crypto ecosystem and invest in BTC.
Anmerkung
EDIT: In addition to my prior post there might still be more room for the downtrend.
China (~3100 USD), Georgia (~3300 USD) and Sweden (~4700 USD) are within the TOP 5 mining countries in the world.
Red numbers for them would begin somewhere within the 3500-5000 USD area.
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