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With bitcoin’s price tapping an all-time high of $68,789 in November, mining profitability skyrocketed attracting massive investments in new production capacity. As a result of the record-high competition in the mining industry, on June 14, Bitcoin’s hash rate reached an all-time high of 231 EH/s further pushing mining profitability to levels last seen in 2020.
“At $40 per MWh, the energy-efficient Antminer S19 currently yields a cash flow per bitcoin of $13k, corresponding to an 80% decline from the November 2021 peak. The Antminer S9, our proxy for old generation machines, is now cash-flow negative.” Arcane Research wrote on Tuesday
Despite public mining firms having a formidable war chest of energy supply to keep their mining rigs running, they have been forced to sell some of their holdings to offset liabilities such as financing and staff salaries as well as keep their cash flows balanced. According to on-chain data, miners sold 100% of their production in May, a massive increase from the usual 25-40% sales witnessed since February.
Although public miners only contribute around 20% of Bitcoin’s global hash rate, their behavior can help one understand the general market sentiment. The miner category cumulatively holds about 800,000 bitcoin with public miners owning over 46,000 coins. If this clique decided to sell its holdings, it could trigger a further market-wide sell-off, worsening the already aching situation.
 
 
That said, Arcane Research sees the ongoing sell-off by miners triggering a further plunge in Bitcoin’s price. Moreover, the firm sees BTC following a path similar to that of 2013 and 2017 where BTC shed 85% and 84% respectively. Currently, BTC is down 70% from its all-time high – an 85% drop would place it in the $10k range.
“If bitcoin follows the blueprint of these cycles, a bottom should occur sometime in late Q4 2022, at a price as low as $10,350.” Arcane Said.
However, despite the ongoing sell-off being painful, Arcane Research believes that HODLers can weather this cycle, with their faith having been tested much harder in 2013 and 2017. Moreover, “those who have held these bear storms know that pain and agony is the price they pay for upside asymmetry,” it added.
As of writing, Bitcoin is trading at $20,327 after a 1.81% uptick in the past 24 hours. During that period, the global crypto market cap also rose by 2.26% to $909.66 billion according to data from CoinMarketCap.
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