Bitcoin mining hits record highs, despite the dip in BTC price

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Despite Bitcoin’s drop in price, Bitcoin mining remains a lucrative business and the industry is bigger than ever. Furthermore, data and research pertaining to Bitcoin mining shows that a miner sell-off to take profit from the Bitcoin mined is not something the market should be concerned about.

Venture Founder, crypto analyst on Twitter, pointed out the most recent miner capitulation was at risk in May last year, when product costs (the rigs and energy needed to run Bitcoin mining equipment) was more than the Bitcoin earned. Now, Bitcoin price is 20% more than the production cost, putting Bitcoin mining as a profitable business, despite the correction the cryptocurrency took from the all-time high.

Bitcoin price, not a problem for mining

Bitcoin took a nearly $30,000 USD tumble from its all-time high value in November, where it nearly hit $70,000 USD. While the market might have taken a knock, the mining industry is promising with the hash rate hitting record highs. This puts to rest any concerns that the dip would lead to a miner sell-off.

Historically, the worst drops Bitcoin has experienced is when miners sell-off and stop mining due to capitulation. The data showing the high hash rate currently mitigates bearish fears regarding the mining market.

The white paper of Bitcoin speaks to this, as Satoshi Nakamoto – the anonymous creator of Bitcoin – wrote:

“The price of any commodity tends to gravitate toward the production cost. If the price is below cost, then production slows down. If the price is above cost, profit can be made by generating and selling more. At the same time, the increased production would increase the difficulty, pushing the cost of generating towards the price.

In later years, when new coin generation is a small percentage of the existing supply, market price will dictate the cost of production more than the other way around.”

In fact, if anything, we’re seeing that miners have been storing their Bitcoin.

According to on-chain analytics firm Glassnode, Bitcoin miners have been increasing the amount of Bitcoin they are HODLing. This accumulation spells long-term bullish activity, with seasoned holders of the cryptocurrency adding to their holdings considerably.

Source: Glassnode

Last week, 7.27 million BTC was taken off the trading market and placed into storage as long-term HODLers accumulate. Indeed, since Bitcoin hit a record peak just above $69,000 USD, there has been an accumulation trend that has not slowed down. This implies that miners seem to have no interest in selling anytime soon, and that they perceive the current  dip as a short-term correction of spot traders selling off rather than anything deeply concerning in the market.

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