The price of bitcoin continues to crash today with sellers forcing the price down below the cost to mine in many countries.
The global average cost to mine a bitcoin is $4,758 according to the Elite Fixtures report that was published on Market Watch in May 2018. The price of bitcoin is $4,481 (at the time of writing) meaning that mining bitcoin in many places around the world has become unprofitable.
What does this mean for bitcoin?
The bitcoin price and mining profitability is often touted by ‘experts’ in the market as something to worry about with some arguing it could be the end of the crypto currency as miners around the world unplug their rigs. Fortunately for bitcoin, nothing could be farther from the truth and highlights the pure genius of Satoshi.
Seeing the price of bitcoin fall below mining profitability will force miners in some countries to turn off or reallocate their hash power. However bitcoin is global and so is the proof of work that validates and secures the network. Miners in countries with more expensive electricity turning their hash power away from bitcoin will reduce the overall hash power of the network which will result in difficulty adjustment, essentially lowing the computer power needed to solve the block.
The difference between countries cost to mine BTC is huge. In Venezuala miners can mint a coin for around $550 wheras in South Korea the cost can be as high as $26,170 according to the Elite Fixtures report.
Source: Elite Fixtures
The difficulty adjustment means that no matter how much hash power is directed at the bitcoin network, the block solution time is always around 10 minutes. This means that as the bitcoin prices falls and miners turn off their rigs, the cost to mine bitcoin follows downwards in tandem.
The brilliance of Bitcoin is that the coin supply and block speed care not one bit for the price. And neither should you.
Who you’re reading:
David Black is a staff writer at The Decentral, living and writing in Chiang Mai, Thailand. He’s also the author of both fiction and non fiction books and likes to debate the finer parts of crypto currency and politics to anyone who will listen.
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Disclaimer: Any and all opinions expressed here are those of David Black alone. The article is for educational and/or entertainment purposes only, so please use it at your own risk.