Brothers, this data is brutal—the average mining cost for listed mining companies has risen to $80,000 per coin, while the coin price is only $70,000, resulting in a loss of nearly $20,000 per coin.
Let me break down what this 'structural turning point' means for you:
First, why is the cost so high?
The continuous increase in computing power means that competition among miners is intensifying. After the halving in 2024, the block reward will drop from 6.25 coins to 3.125 coins, directly halving income. However, electricity costs, mining machine depreciation, and operational costs are increasing rather than decreasing. Listed mining companies also have to bear compliance costs, so the cost line is much higher than that of small mining farms.
Second, what happens when miners are losing money?
Historically, when coin prices remain below the cost line, three things happen:
· Some miners shut down: computing power decreases, difficulty adjusts downwards, and the cost line subsequently lowers.
· Miners sell off reserves: selling coins to pay electricity bills and repay loans, increasing market selling pressure.
· Industry reshuffling: high-cost mining companies are eliminated, while low-cost mining companies capture market share.
Third, is this a signal of the end of a bear market?
During the bear market of 2022, miners also experienced prolonged losses while mining, and only saw a bottom after a significant drop in computing power. What’s different this time is that ETFs and strategies are continuously stepping in. The coins sold by miners may be bought by institutions, forming a 'supply transfer.'
Our insights:
· Stay alert for short-term selling pressure, but don't panic excessively. Miners hold about 2 million BTC in reserves, which cannot be sold off all at once.
· Pay attention to changes in computing power in the medium term. If computing power starts to decline, it indicates that miners are shutting down, and the bottom may not be far away.
· In the long term, the cost line serves as a 'price anchor.' When the coin price is far below the cost, it is often an undervalued area.
In terms of operations, continue to watch around $68,000, and consider increasing positions after the selling pressure from miners has been released. ETFs are continuously buying, which may absorb some of the selling pressure.
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