In light of FTX’s collapse, mining bitcoin has never been more complicated right now.
In particular, despite bitcoin’s short-term recovery, there is incredible pressure preventing any return to $20,000 and of course to the historic high of $69,000, which is now very far away. In addition to the bankruptcy of FTX, there are also technical considerations that come into play, especially everything to do with mining.
Because unlike ether and other cryptocurrencies that have adopted a so-called “proof of stake” operation, bitcoin still operates on the good old “proof of work”, therefore its value is largely determined by its production, its mining. And there we enter a really complicated phase, which largely explains this pressure on prices.
Even now, it has never been as complicated as it is now to mine bitcoin. As proof, difficulty has reached an all-time high of 36,900 billion hashes, a 51% increase since the start of the year. Well, historical record: we are facing an activity that is increasingly difficult and increasingly less profitable.
Sell more bitcoins
As we said on Tuesday, bitcoin has stagnated for a few weeks below its break-even point, which is around $19,000 at the moment. We therefore find ourselves in a scenario of a cryptocurrency that is increasingly difficult to mine and less and less profitable, with a downward spiral setting in as miners are forced to sell more bitcoins to compensate for the drop in their profits. We shouldn’t be surprised to see prices all the way down at the moment.