A recent update from Fundstrat reminds us that Bitcoin mining is still highly profitable even after standalone systems were released in 2017.
The mining of cryptocurrencies is an integral unit of any crypto system. Miners invest heavily in expensive hardware and operational costs of running the system. In turn, they are rewarded with freshly minted bitcoin.
Tremendous research and development has been made on the mining systems. And the profits vary as per the break-even cost of the hardware used for mining. Current new age miners are energy efficient and yield up to 100% profits.
The break-even cost is averaged to be around $6300. The figure is consistent with the number researched and reported by Coinshare. The revenue is even more substantial as this figure also includes the cost of depreciation.
Mining farms with large number of hardware units has also been found to be more efficient than standalone systems.
A Rising Hash Rate
Bitcoin mining hash rate has also been found to be on the rise. New all-time highs are being recorded on a weekly basis. It is an indicator of a growing ecosystem. But that comes at a price.
The increasing mining hash rate has adverse effects to the difficulty of mining bitcoin. Older mining rigs are now out of date and competition is only getting stiffer by the day.
Gone are the times when college students mined bitcoin at the comfort of their dormitories. But as bitcoin became mainstream and more users joining the bandwagon, more computing power was obligatory. The 2017 crypto boom made the situation no better. Today, mining belongs to the high end firms with resources to purchase high end ASIC rigs that have been innovated specifically for mining
Mining Capitulation Theory
But as much as it may look like a lost end for miners, the capitulation of old miners is a bullish signal for the flagship cryptocurrency. It is a theory developed by crypto analyst Willy Woo.
The theory states that as the difficulty ribbon decompresses, more bitcoin is left to be accumulated for other miners. Woo suggests that since early miners will likely hold bitcoin, a supply shock will cause an increase in bitcoin price.
Now, while mining is an integral part in bitcoin’s supply, it is still controlled by math. A dip in hashing power or a rise wouldn’t affect bitcoin’s supply. It will be readjusted to 10 minutes a block, affecting the profits only.
20k By Year End-ShapeShift CEO
Meanwhile, bitcoin still hovers above $10,000. But this won’t stay for long according to shapeshift CEO Erik Voorhees. He foresees the currency hitting $20,000 by the end of 2019.
Voorhees was speaking to Ethereum World News when he expressed his bullish statements. He urged people to own and hold on bitcoin as much as possible, given the long term bullish picture.