Bitcoin price rebounded strongly by nearly 50%, miners are back

Source of this article: Caiyun Blockchain , the original title "Some miners return to the mine as the price of Bitcoin rebounds above $ 6,000"

Author: ack123888

Bitcoin prices have rebounded strongly in the past week or so, compared with the lows set during the sell-off caused by extreme panic earlier this month, and the market value has recovered by almost 50%.

With the rise in prices, some Bitcoin miners have begun to return to the market and continue to mine, as evidenced by the small rise in hashrate (hash rate) across the entire network.

Network computing power recovers after deadly panic selling

Bitcoin is a unique financial asset because it represents the value of the entire distributed blockchain network and is maintained through a process called proof of work. The miner solves complex mathematical equations to prove that the transaction verification work has been completed, so as to obtain the bitcoin released by the block as a return on the previous effort and production costs.

The goal of the miner is to produce bitcoin at a production cost well below the price and thus make a profit.

However, when the price of bitcoin reaches its lowest point, miners usually surrender, either shutting down the mines they operate or simply shutting down their machines until the price of bitcoin rebounds.

During the recent panic selling caused by a coronavirus pandemic, the first cryptocurrency in history fell from $ 10,000 to less than $ 4,000 in a matter of weeks.

The slump has caused many miners to shut down their machines, as evidenced by the sharp drop in the hash rate of the cryptocurrency network.

Bitcoin hash rate is increasing, although some backward mining businesses surrendered when Bitcoin price reached $ 5,000

The miner just shut down the machine and waited for the price of bitcoin to rise so that the price of the coin allowed mining again.

— Rekt Capital March 24, 2020

However, as the price of bitcoin has rebounded strongly enough, some larger bitcoin mining businesses can already cover the initial investment return on energy costs, and the computing power of the entire network has begun to rise.

Despite price rebound, Bitcoin price continues to be below average production cost

As far as bitcoin mining is concerned, it has the characteristics of survival of the fittest. When the price of bitcoin drops to such a low level, only miners with the lowest energy costs and the highest operating efficiency can withstand such a large risk.

Although the hash rate of the entire network does show signs of recovery, the price of Bitcoin is still lower than the production cost of most small miners, and they are more willing to directly from the exchange than to run expensive and energy-consuming rigs directly at the mine Buy cryptocurrency.

The recovery of the hash rate is a relatively positive signal. What is worrying is that as smaller miners leave the market, the computing power behind the Bitcoin blockchain will become more and more concentrated, and only the most efficient miners control the largest share of the network, essentially destroying The value of assets as a distributed network.

If anyone wants to take this opportunity to exploit the loopholes in the protocol, any single entity that gets most of the network's computing power can have a devastating effect on Bitcoin.

We will continue to update Blocking; if you have any questions or suggestions, please contact us!

Share:

Was this article helpful?

93 out of 132 found this helpful

Discover more

Blockchain

Life After the Collapse of Sanjian Capital: Surfing, Meditation, and World Travel for the Founders

When their hedge fund failed, the entire industry collapsed. The resulting crisis drained the savings of millions of ...

Blockchain

Long Push Receiving 1 million ARB airdrop, Summary and Reflections on 2 Years in the Circle

Note This article is from @0xfarmer_ on Twitter, summarized by MarsBit as follows Time flies. I have finished my subs...

Blockchain

A picture proves that there are a large number of cleaning transactions on the exchange

In order to more accurately depict trading activity, the "Real 10" indicator only considers the volume of t...

Blockchain

Interpretation of the new SFC regulation: How to operate a licensed virtual asset exchange in Hong Kong?

Author: According to Health Source: Zero Finance On the evening of November 6, the Hong Kong Securities Regulatory Co...

Policy

BlockFi Emerges from Bankruptcy, Ready to Pay Back Creditors and Recover Assets

In November, popular crypto lending platform BlockFi made headlines for their bankruptcy filing caused by the FTX con...

Policy

Sam Bankman-Fried's Lawyers Swoop In Pitching for Energetic Jury Instruction Shake-Up!

In a final attempt to secure a not-guilty verdict for their client, the Defense team referenced multiple similar case...