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- Bitcoin‘s production costs are falling, and the price is rising to new highs
- Bitcoin’s potential price floor was already being lowered as a result of the Chinese miner exodus
- According to Edwards, the Chinese mining craze is bad for Bitcoin
Bitcoin’s production cost is falling, and data shows that price action often bounces back to new highs if it falls below it.According to one analyst, China’s crackdown on Bitcoin (BTC) mining may have unintended consequences for BTC price action. Charles Edwards, CEO of investment firm Capriole, claimed in a tweet on June 18 that the Chinese miner exodus was already lowering Bitcoin’s potential price floor.
Don’t believe the China scaremongering
Bitcoin’s electrical value — the mixed value of keeping the community running — is dropping as a result of a shake-up that sees Bitcoin hashing energy redistributed away from China. As Edwards points out, spot price rarely crosses this Bitcoin production cost. As the indicator falls, it opens the door to another price drop, which has been followed by bull runs in the past.
Don’t believe it: the China mining craze is bad for Bitcoin, according to Edwards, who provided an accompanying chart of Bitcoin production costs.
When compared to previous years’ performance, 2017 bears a striking resemblance. Bitcoin experienced a run to two local peaks during that year, with a significant retracement in between. The spot price fell below the upper production cost boundary during that event.
A thorn in Bitcoin’s side
Seasoned Bitcoiners have expressed dissatisfaction with the way changes in China’s mining scene have been portrayed, which has frequently been negative. They point out that Bitcoin is not reliant on Chinese miners, and that as the network seeks ever more efficient ways to expand, a redistribution of hashing activity will inevitably occur.
Aside from the massive amounts of energy required for the computing power required to create cryptocurrencies, the central government is also concerned about speculation following the price of bitcoin skyrocketing.
Local media reported on Saturday that China’s crackdown on cryptocurrencies has spread to the country’s southwest, with a campaign against bitcoin miners abusing electricity in Yunnan province.
An official in China’s Sichuan province said that energy regulators will meet with local power companies soon to gather information on cryptocurrency mining, potentially leading to a crackdown in the country’s second-largest Bitcoin production hub.
Steve Anderson is an Australian crypto enthusiast. He is a specialist in management and trading for over 5 years. Steve has worked as a crypto trader, he loves learning about decentralisation, understanding the true potential of the blockchain.
