Average breakeven production cost for miners could be around $15K post-halving, Trade Block says
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February 14, 2020


Estimated cost breakdown for crypto miners via TradeBlock
Estimated cost breakdown for crypto miners. Source: TradeBlock
 


Bitcoin investors speculate the upcoming halving could send prices skyrocketing to $90,000 or higher


To the operators of high-speed computers used to mine for bitcoin, the halving looks more like a doubling — of costs.

In a new report , the crypto-focused research firm TradeBlock estimates the average cost to mine a single bitcoin (BTC) could jump to $12,525 after the halving, expected in May. That’s nearly double the average cost of $6,851 now. Essentially, miners will have to run twice the number of computations, with a corresponding increase in electricity usage, to get the same amount of bitcoin they’re getting now. 

The estimated cost is also well above the current market price of about $10,300, providing an illustration of how the halving could turn the crypto-mining industry’s profitability upside-down if market prices don't rise. 

Researchers at the U.S. bank JPMorgan Chase have described bitcoin miners’ average cost as the cryptocurrency’s “intrinsic value.”

TradeBlock’s estimated post-halving cost of $12,525 assumes the network’s current processing power, known as the “hash rate,” stays at its current level.

The analysis also assumes an electricity price of 6 U.S. cents per kilowatt-hour, which is higher than the roughly 2 cents that some big crypto-mining firms say they can get from the local grid or through wholesale purchasing agreements. 


Another quibble-prone assumption is that roughly 30 percent of mining computers will “transition” to the latest technology, while 70 percent “remain on older devices,” according to TradeBlock.

Some crypto-industry executives say it's more likely many of the older-generation mining computers or "rigs" will become uneconomical after the halving, leaving faster machines to dominate the network. 


Whatever the case, the threshold bears monitoring closely for bitcoin investors, says John Todaro, TradeBlock's director of digital currency research. 

"It's very helpful to know what the miners are thinking, what the miners are doing," Todaro said in a phone interview. "There might be some miners that are profitable at those levels, but not a lot of miners are going to be operating at a loss, and they might take their rigs offline."


  
Bulls Eyes Golden Daily Cross

BTC: Price: $10,215 | Market cap: $186.4 billion | 24-Hr Volume: $1.5 billion



Trend: Bullish

Bitcoin is flashing signs of a bullish pattern not seen in almost 10 months.

The world’s premier cryptocurrency could be signaling a move higher in the coming weeks, courtesy of two major moving averages heading for collision which opens up the possibility for a golden cross to form on the daily chart.

A golden cross occurs when a short-term moving average (MA) rises above a longer-term one, typically the 50-day and 200-day MA’s hinting at strong upward momentum in an assets price.

The last time such an instance occurred was back in April 2019, when the price of BTC rose 175 percent to create a yearly high of around $13,880 after enduring a temporary pullback in its price from $4,995, Bitstamp data shows.

Therefore, BTC could be in for a short-term pullback before making its way to a new high for 2020.

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