{"id":1748,"date":"2022-02-08T07:10:26","date_gmt":"2022-02-08T07:10:26","guid":{"rendered":"https:\/\/cryptoheretostay.com\/?p=1748"},"modified":"2022-02-08T07:10:26","modified_gmt":"2022-02-08T07:10:26","slug":"the-miner-capitulation-number-a-look-at-when-bitcoins-price-crashed-below-the-cost-of-production","status":"publish","type":"post","link":"https:\/\/cryptoheretostay.com\/?p=1748","title":{"rendered":"The Miner Capitulation Number: A Look at When Bitcoin\u2019s Price Crashed Below the Cost of Production"},"content":{"rendered":"<p> <script type=\"text\/javascript\">\r\namzn_assoc_placement = \"adunit0\";\r\namzn_assoc_tracking_id = \"totafreearti-20\";\r\namzn_assoc_ad_mode = \"search\";\r\namzn_assoc_ad_type = \"smart\";\r\namzn_assoc_marketplace = \"amazon\";\r\namzn_assoc_region = \"US\";\r\namzn_assoc_default_search_phrase = \"crypto\";\r\namzn_assoc_default_category = \"All\";\r\namzn_assoc_search_bar = \"false\";\r\namzn_assoc_title = \"\";\r\namzn_assoc_rows =\"1\";\r\n<\/script>\r\n<script src=\"\/\/z-na.amazon-adsystem.com\/widgets\/onejs?MarketPlace=US\"><\/script><br \/>\n<\/p>\n<p><strong>Over the last 30 days, Bitcoin\u2019s hashrate has been coasting along at the highest levels ever recorded during the network\u2019s lifetime. Bitcoin\u2019s price improved recently but it is still down 38% from the crypto asset\u2019s high, making bitcoin less profitable to mine. However, bitcoin mining is still profitable, in contrast to ten years ago, when the leading crypto asset\u2019s value crashed below the cost of production.<\/strong><\/p>\n<h2>Bitcoin\u2019s Price Is 38% Lower Than It\u2019s All-Time High, Bitcoin Miners Still Profit<\/h2>\n<p>While bitcoin\u2019s price value has climbed quite high against the U.S. dollar during the last 13 years, the network\u2019s hashrate has also risen to all-time highs. Today, the hashrate is coasting along above two hundred quintillion hashes per second (H\/s) which is a lot stronger than the Bitcoin network\u2019s hashrate was on January 5, 2009. On that day, statistics show that nine hundred forty-eight thousand H\/s was dedicated to the protocol\u2019s security. Calculations show Bitcoin\u2019s hashrate has increased by twenty-one quadrillion percent \u2014 or 21,093,375,098,215,930% \u2014 since January 5, 2009.<\/p>\n<p>Bitcoin hashrate between January 5, 2009 and February 7, 2022.<\/p>\n<p>Bitcoin\u2019s hashrate is coasting along at all-time highs, but the crypto asset\u2019s value is 38% lower than it was three months ago, on November 10, 2021. This in turn has made it less profitable to mine bitcoin (BTC), but still profitable for a decent majority of high-powered mining rigs. For instance, using today\u2019s BTC exchange rates, the Bitmain Antminer S19 Pro with 110 terahash per second (TH\/s) will produce $16.81 per day if the machine\u2019s electrical costs are around $0.12 per kilowatt-hour (kWh). SHA256 machines that produce at least 25 TH\/s will still turn a profit using today\u2019s BTC exchange rate and $0.12 per kWh.<\/p>\n<h2>Mid-October, 2011: Bitcoin\u2019s Price Drops Below the Cost of Production<\/h2>\n<p>Over ten years ago, on October 18, 2011, the cost of a single bitcoin fell below the price to produce bitcoin (BTC). It wasn\u2019t the only time this has happened, but it was one of the first times the price of bitcoin was said to be lower than the cost to mine the digital currency. That week in 2011, the network\u2019s hashrate was around 8.596 TH\/s or 8,596,000,000,000 hashes per second. While the hashrate was much less than today, it was still nine-hundred-six million percent (906,593,161.72%) higher in 2011 than on January 5, 2009.<\/p>\n<p>At the time, when BTC\u2019s price fell below the cost of production, it made international headlines. The Guardian\u2019s contributor \u200b\u200bCharles Arthur wrote about the incident on October 18, 2011, when he explained how BTC\u2019s price crashed from a high of over $30 per unit to $1-2 per BTC in mid-October. That year, Arthur called BTC a \u201c\u2018Hackers\u2019 virtual currency and favoured means of exchange.\u201d The Guardian writer\u2019s report said that BTC\u2019s price \u201cplummeted across exchanges \u2013 to a level where it costs more to \u2018mine\u2019 them than they are worth.\u201d<\/p>\n<h2>Bitcoin\u2019s Value Drops Below Production Cost in 2015, 2018, and 2020 \u2014 Estimates Say \u2018Current Production Cost Is $34K\u2019<\/h2>\n<p>About a year after the 2013 price high, BTC\u2019s value started to near dropping below the cost of production again. During the first week of December, the network hashrate declined and the CEO of Spondoolies-Tech, Guy Corem, explained how the crypto asset\u2019s market value was affecting miners at the time. \u201cUnder the current bitcoin value, mining gear efficiency of 0.5\u20130.7 J\/GH range and energy cost, we\u2019ll reach equilibrium very soon,\u201d Corem said. The cost to mine BTC was reportedly more than they were worth in mid-January 2015 after Corem made those statements. That month in 2015, the price of bitcoin (BTC) dropped below the $200 mark.<\/p>\n<p>According to reports in mid-December 2018, BTC\u2019s price was lower than production costs again. At that time in 2018, BTC was changing hands for $3,200 per unit. Furthermore, on March 12, 2020, often referred to as \u2018Black Thursday,\u2019 BTC\u2019s price shuddered and tanked down to the mid-$3K range, making it unprofitable for a majority of the network\u2019s mining participants. While BTC\u2019s price is 38% lower than the all-time high, some believe that it is still near current mining costs. In mid-January of this year, the popular Twitter account dubbed \u2018Venture Founder\u2019 told his 14,600 social media followers that \u201ccurrent production cost is $34K.\u201d<\/p>\n<p>Venture Founder also mentioned the crypto asset\u2019s value crashing below the cost of production in December 2018 and March 2020. \u201cThe worst dumps bitcoin ever had were due to miners capitulation (Dec 2018, Mar 2020), when BTC fell below production costs, it is at risk for miner capitulation,\u201d Venture Founder tweeted. \u201cBTC was at risk for miner capitulation at $30K in May. The current production cost is $34K,\u201d he added.<\/p>\n<h2>Can Bitcoin\u2019s All-in Sustaining Production Cost Rise?<\/h2>\n<p>Knowing exactly what the cost of production is, and what a bitcoin miner\u2019s all-in sustaining cost is, would be extremely hard to estimate, but there have been many who believe there is a number. The aforementioned instances describing the times and price-points where people believed the price of BTC had fallen below the cost to mine the crypto asset are a perfect example of this belief.<\/p>\n<p>For example, while a miner leverages a 100 TH\/s machine and gets a daily profit for that machine of around $16.81 per day with electricity costing $0.12 per kWh, another miner could pay $0.06 per kWh. Moreover, one study published in October 2020 claims that \u201cthe cost of bitcoin mining has never really increased.\u201d<\/p>\n<p>Tags in this story<\/p>\n<p>2011, 2013, 2014, 2015, 2018, 2019, 2020, All-in Sustaining, Below Mining Cost, Bitcoin Miners, Bitcoin mining, Black Thursday, BTC, BTC Mining, Cost Rise, Crypto asset, crypto mining, Hashpower, Hashrate, increase, Mining Crypto, network, price of bitcoin, Price of BTC, Production Cost<\/p>\n<p><em><strong>What do you think about the reported instances where it\u2019s been said that the price of bitcoin fell below the cost of production? What do you think about the estimated $34K current cost of production statement? Let us know what you think about this subject in the comments section below. <\/strong><\/em><\/p>\n<p>Jamie Redman <\/p>\n<p class=\"article__body__author__info__about\">\nJamie Redman is the News Lead at Bitcoin.com News and a financial tech journalist living in Florida. Redman has been an active member of the cryptocurrency community since 2011. He has a passion for Bitcoin, open-source code, and decentralized applications. Since September 2015, Redman has written more than 5,000 articles for Bitcoin.com News about the disruptive protocols emerging today.<\/p>\n<p><i class=\"td-icon-font td-icon-twitter\"\/><\/p>\n<p class=\"images_credits\"><em>Image Credits: Shutterstock, Pixabay, Wiki Commons<\/em><\/p>\n<p><strong>Disclaimer<\/strong>: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.<\/p>\n<p>More Popular NewsIn Case You Missed It<\/p>\n<p><script type=\"text\/javascript\">\r\namzn_assoc_placement = \"adunit0\";\r\namzn_assoc_tracking_id = \"totafreearti-20\";\r\namzn_assoc_ad_mode = \"search\";\r\namzn_assoc_ad_type = \"smart\";\r\namzn_assoc_marketplace = \"amazon\";\r\namzn_assoc_region = \"US\";\r\namzn_assoc_default_search_phrase = \"bitcoin\";\r\namzn_assoc_default_category = \"All\";\r\namzn_assoc_search_bar = \"false\";\r\namzn_assoc_title = \"\";\r\namzn_assoc_rows =\"1\";\r\n<\/script>\r\n<script src=\"\/\/z-na.amazon-adsystem.com\/widgets\/onejs?MarketPlace=US\"><\/script><br \/>\n<br \/><a href=\"https:\/\/news.bitcoin.com\/miner-capitulation-number-a-look-at-when-bitcoins-price-crashed-below-cost-of-production\/\" target=\"_blank\" rel=\"noopener\">Source<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Over the last 30 days, Bitcoin\u2019s hashrate has been coasting along at the highest levels ever recorded during the network\u2019s lifetime. Bitcoin\u2019s price improved recently but it is still down 38% from the crypto asset\u2019s high, making bitcoin less profitable to mine. However, bitcoin mining is still profitable, in contrast to ten years ago, when [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":1749,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":"","_wp_rev_ctl_limit":""},"categories":[1],"tags":[],"class_list":["post-1748","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-crypto-updates"],"_links":{"self":[{"href":"https:\/\/cryptoheretostay.com\/index.php?rest_route=\/wp\/v2\/posts\/1748","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/cryptoheretostay.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/cryptoheretostay.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/cryptoheretostay.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/cryptoheretostay.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=1748"}],"version-history":[{"count":1,"href":"https:\/\/cryptoheretostay.com\/index.php?rest_route=\/wp\/v2\/posts\/1748\/revisions"}],"predecessor-version":[{"id":1750,"href":"https:\/\/cryptoheretostay.com\/index.php?rest_route=\/wp\/v2\/posts\/1748\/revisions\/1750"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/cryptoheretostay.com\/index.php?rest_route=\/wp\/v2\/media\/1749"}],"wp:attachment":[{"href":"https:\/\/cryptoheretostay.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=1748"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/cryptoheretostay.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=1748"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/cryptoheretostay.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=1748"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}