What is the true cost of producing one Bitcoin? A recent report from Coinshares revealed some interesting findings, highlighting the rising mining difficulty and the potential impact on miners. Bitcoin halvings are hugely important, and this year’s halving event was particularly remarkable. Namely, it was characterized by a rapid increase in mining difficulty, which could reduce profitability.
As a result, many miners have been forced to shut down their operations due to their inability to maintain a profitable operation. The most significant effect of the higher mining difficulty observed recently is the increase in production costs. Coinshares report he estimates that the current cost of producing one Bitcoin is around $49,500.
This means that Bitcoin mining is becoming less and less profitable for miners. Bitcoin mining carries the risk of increasing centralization as the difficulty level increases. The reason for this is that in the mining industry, only the participating large institutional miners with strong capital will be able to keep up with the rising costs.
Bitcoin miner reserves maintain an interesting relationship with the price of Bitcoin and prevailing market sentiment. Miners’ reserves usually increase when miners expect higher prices and decrease during times of uncertainty. October was an overall bullish month for the BTC price, and based on sentiment, further gains are expected in the coming months.
This led to a surge in Bitcoin miners’ reserves, which reached a 4-week high of 1.815 million BTC on October 26. It declined slightly after that and has since dropped to 1.811 million BTC. The difference equates to around 40,000 BTC, which at the time of writing is worth roughly $2.6 billion at the current market value.
In other words, the inflow and outflow of miner’s reserve has contributed significantly to the evolution of the BTC price over the past week. The decline in mining reserves is largely with American elections due to the surge in uncertainty related to In general, an increase in mining reserves indicates that miners are deciding to hold in anticipation of higher prices.
Could BTC fall back to the $60,000 range? A few days ago, it seemed that Bitcoin could break another price peak. However, the return of uncertainty had a negative effect on the price. At the time of writing, BTC had already fallen to $67,208 in the last 24 hours. The leading cryptocurrency has been in the red for the past 6 consecutive days, which shows a high degree of selling pressure.
Persistent uncertainty during the week could result in further declines. The Fibonacci retracement suggests that the price may find the bottom of the current trend between $60,500 and $63,100. Note that this was based on the September low as well as the most recent high at the end of October. At the time of writing, Bitcoin was at $67,829, a mere 6.92% drop from the Fibonacci accumulation range.
