The price of Bitcoin appears to have leveled off just above $3000 and has held steady in the $3200-3400 range. Other crypto-currencies have leveled off as well after taking more or less the same percentage hit from their recent highs.
At this price, the NY Post is reporting that mining Bitcoin is no longer profitable outside of China and Iceland. While we at Bithaven haven’t yet gone through the math on power consumption of the newest mining rigs versus reward rates, this news doesn’t seem to pass the smell test. Maybe in the sub-$100 days there was some leeway on profitability because miners were optimistic and considered it an investment in the ecosystem, but miners were profitable long before Bitcoin broke $1000, and that wasn’t so long ago that electrical rates in the US and Europe have changed much.
Remember, Bitcoin first broke $1000 in February 2017, less than two years ago (2017 prices tables). Have the economics of mining changed that much in 22 months? It may be hard to get payback on the newest mining rigs, but there is plenty of older gen hardware (i.e. only a few months old) out there that can still mine effectively. Maybe the benefit of sitting at this price point is that it will decentralize mining from the few big pools using special-purpose hardware and back to the old days when lots of Bitcoin users ran a mining node in their home.
As an aside, looking back at the Bitcoin price history charts put the current crash in context. Yes, we miss the days of $16,000 not so long ago, but on this day two years ago (2016), Bitcoin had not even broken $800, meaning today’s price is a four-fold increase in two years. Not bad even if we’re sitting on the downside of a year that’s shown consistent slide. No way to tell where it will go from here, but as the system grows in utility, it may start to look rosy again.