Till now we had only heard of the repercussions of the Bitcoin price hitting a low, on the bitcoin investors and traders. Now even the bitcoin miners are becoming cautious and apprehensive of putting their resources in mining as the Bitcoin price has plunged over the last few months.
Morgan Stanley analysts say that if bitcoin price can’t recover $8,600 soon, bitcoin “miners” will likely find it unprofitable to keep creating the cryptocurrency.
On Thursday Bitcoin price traded slightly higher near $8,200. It has strived to recuperate in the last few months after plunging from a record high of above $19,500 in mid-December.
Equity analyst Charlie Chan and his team said in a Thursday note.
“We estimate the break-even point for big mining pools should be US$8,600, even if we assume a very low electricity cost (US$0.03 kW/h). Therefore, we think the Bitcoin mining hardware demand and price will decline further and affect TSMC’s wafer demand.”
Source : Morgan Stanley Research estimates
Also Read: List Of Best Bitcoin Mining Pool
Bitcoin mining consumes high computing power to solve a complex mathematical equation, determining an anonymous miner used the process the network agreed upon to create the blockchain’s record of the transaction. Miners then get bitcoin in remuneration for completing the equation.
In China, miners work together in “pools” to improve efficiency. With more miners participating, the difficulty of the process increases.
The Morgan Stanley analysts said.
“We think the injection of new mining capacity will further increase the mining difficulty in 2H18. Even if the Bitcoin price stays the same in 2H18, we believe mining profits would drop rapidly, according to our simulation.”
The Morgan Stanley model estimates an application-specific integrated circuit or ASIC; vendor would break even over two years if bitcoin price traded close to $5,000. This would render the entire complex process of Bitcoin mining useless to the miners who are investing high end resources in mining.
Also Read: Bitcoin Mining May Become More Profitable With Intel Stepping In
KryptoMoney.com publishes latest news and updates about Bitcoin, Blockchain Technology ,Cryptocurrencies and upcoming ICO’s.
Keep in mind that we may receive commissions when you click our links and make purchases. However, this does not impact our reviews and comparisons. We try our best to keep things fair and balanced, in order to help you make the best choice for you.
