Each year at the commencement of the new year, the mines in the currency area will predict what the currency’s price will be this year. There is a bull market that says there is also a saying that the bear market will continue. However, in search of the truth of the facts, we will analyze some of the relevant factors that will affect the future price of the currency due to the difficulty of mining. Does the hash rate (a measure of mining performance) really affect Bit coin’s price? The answer is yes. In the medium and long term, the hash rate can be seen as a neutral indicator for fundamental analysis, but the relationship between the two is not a simple positive correlation. Let us analyze it briefly.
The rise in coin prices will undoubtedly attract large amounts of capital and mining equipment to the mining rental industry, which will increase the computing power of the entire network and the difficulty of extraction. At the same time, increasing the hash rate means that the cost of mining each Bitcoin is higher, so the corresponding price of the coin also increases so that the two markets are essentially in sync and the Bitcoin price is higher than the hash rate.
Second, the hash rate has skyrocketed 30 billion times from 2009 to the present and has constantly updated its all-time high. The increase in the hash rate and the sharp increase in mining difficulties resulted in revenue from a single machine almost every two months cut in half. If mining capacity is too high, the increasing hash rate will move towards falling miner costs. If profits fall, miners can also sell Bitcoin, which will cause the Bitcoin price to cool. However, due to factors such as industrial design, the hash value lags slightly behind the Bitcoin price, so the hash rate doesn’t follow the Bitcoin price and the general side continues to rise slowly. If the price of Bitcoin falls, the price of mining machinery will also drop completely. For example, the S9 mining machine was over 10,000 couple of years before and has now been reduced to several thousand. Lower mining rental costs mean miners will continue to get a good return on investment.
Many currency analysts have tried to calculate the devaluation of Bitcoin miners’ balance of payments in hopes of supporting Bitcoin prices. To date, well-known cryptocurrency research companies have looked at the $8,000 threshold. The result of famous investment banks was that the break-even point of the big miners and retailers was $50,000 and $8,600, respectively. However, in the eyes of many analysts, Bitcoin prices are only over $5,000, and miners can make money.
In fact, they are unable to identify the key factors that affect extraction costs, such as to measure the electricity generation costs exactly. If the price of electricity is lower, the price is lower. Judging by the recent secondary hikes, the Bitcoin price threshold has likely been touched. The profit thresholds are lower for miners who draw cheap electricity bills. For example, the overseas RHY mines, https://en.rhy.com, have been selected by miners in the bear market; the RHY mine has a large capacity of 900 MW in the Middle East and Georgia. Mining electricity costs are lower, leasing of mining machinery and computer leasing is widespread and supported by miners. Since miners are subject to this low-cost electricity bill, defending their rich mining income against the current depressed currency is not a problem.
Advantages of mining:
1. The risk is reduced, as long as the costs can be controlled and expanded, the benefit is very considerable. If the price of the currency rises, the profit from mining rental can be slightly lower than that of direct speculation, but it can still be earned. If the price of the coin falls, the coin will dig more than expected due to a calculation error. If the price of the coin is high, the miner can sell the coin excavated. If the price of the coin does not meet psychological expectations, the miner can choose the coin and wait for the coin to rise.
2. Mining only has to set up mining procedures, perform daily maintenance to ensure the operation of the mining machine, and mining safety has completely freed the miners. There are many online mining rental platforms that can provide a full range of accommodations. Services like the RHY mine can view real-time earnings every day, sit back and wait for bills, and the mine’s electricity costs can reach $0.025 per mile of mine power compared to most mines.
And now the market is slowly improving. From the second half of 2019, Bitcoin prices have stopped falling and are fluctuating again, and the hash rate has gradually stabilized and mining difficulties have flattened out. By 2020, the two were basically silent on both sides. The last time this happened was in 2015. Since January 2015, the currency rate has not fallen and the hash rate has gradually stabilized. The two sides were side by side almost simultaneously for 10 months, followed by a hash rate. With the recovery of the rise and the recovery of the Bitcoin price, a step back, an innovative start phase, opened a bull market turn. If this year’s history will repeat itself, let’s wait and see.