Bitcoin prices sliding, miners stop mining: Is this crypto at a dead end?
It looks like there is no end to Crypto’s wait in purgatory, bouncing back and forth in the $5,900, to $6,200 range.
At this level, Bitcoin is not too high to sell for a profit, not too low to divest from, and not enough for miners to make money off.
It’s leaving just about every investor in a quandary.
Is this a dead end?
Bitcoin has tumbled back below $6,000 to the $5800 range thanks to tougher Anti Money Laundering (AML) rules in South Korea and US Congress being told Bitcoin is a threat to the US election, According to intelligence site Zerohedge.com
Last week, Japan’s FSA stepped up its restrictions on exchanges related to AML.
South Korea’s Financial Services Commission (FSC) conducted on-site inspections of three domestic banks – Nonghyup, Kookmin, and Hana Bank – the results of which prompted the update to AML guidelines.
According to the revised guidelines, crypto exchanges are also responsible for making certain that foreigners are not using local crypto exchanges, criminals are not using the personal accounts of other people to launder money, and that there are no suspicious transactions and payment processing, CCN news site writes.
And, as CCN reports, for a significant part of 2017 and even this year, social media platforms have taken a lot of heat over their alleged role in influencing the 2016 U.S. presidential election. And for a period of time on Tuesday during a congressional hearing, cryptocurrencies were put in the same spot — at least with regards to the future.
According to Scott Dueweke, a cybersecurity expert and the president of The Identity and Payments Association (IDPAY), the danger of using virtual currencies to influence the U.S. electoral process is acuter now considering that there are state actors who are turning to cryptocurrencies as a way of bypassing the financial system of the West as well as its AML and Know-Your-Client regulatory requirements.
Graphs courtesy of https://www.zerohedge.com/
Rolling down further
According to cryptocurrency trader Ran Neu-Ner, host of CNBC Africa’s “Crypto Trader”, Bitcoin is likely to go even lower.
“There’s more blood to come,” Neu-Ner, said.
Neu-Ner said there’s more than a 605 chance of a crypto bear market — compared with a 16% chance of a bull market.
“And a bear market means we’re going to test $5,350” as the new low, Neu-Ner, also the founder of OnChain Capita, said.
No good mining the business now
Neu-Ner said mining costs outweigh profits at around $5,000.
“That’s where the miners look at this and go: ‘Is it actually worth keeping the machine on?”‘ Neu-Ner said earlier in June. “Then we may see a very different game in mining.”
Neu-Ner reiterated those comments on Thursday and said bitcoin will soon reach a point where “miners find it’s not viable to mine. They’re going to switch off their machines.”
He said many miners have already begun doing so, CNBC reported.
According to Hacked, an industry site, the Bitcoin price is trading in “no man’s land.”
According to Fundstrat market technician Robert Sluymer, Bitcoin must make its way back to the $6,300-$6,400 range to pave the way for a comeback.
Bitcoin mining profits get slashed when the power consumption costs exceed that of the profits they earn from creating more coins.
How does mining work
The mining rigs are comprised of computer servers that command unique hardware and require constant cooling.
At the start of 2018, the hashrate, which reflects mining power, was on the rise. Bitmain currently controls much of the hashrate, and Bitfury is another dominant player.
Fundstrat in a March report revealed the breakeven level for bitcoin mining based on their model — which is comprised of hash difficulty, hash power, number of coins in circulation, power consumption, power costs and more — is $8,000, reported Hacked.
“Based on electricity costs of US$0.03 kW/h, Morgan Stanley reportedly attaches a breakeven threshold for bitcoin mining pools at $8,600. With the BTC price hovering at $6,100, bitcoin miner profits have been dwindling.”
How does Bitcoin mining work?