Against the background of a sharp fall in the market, one can also observe a noticeable decrease in the hash rates of the main cryptocurrencies. Bitcoin has lost about 12% relative to the historical maximum, Ethereum is even worse – the hash rate of this network decreased by Monday, November 19, by 25% relative to peak values in August of this year.
The historical maximum of the hash rate in the Ethereum network was recorded on August 9 (295911.9974 GH/s), on November 19, this indicator, according to Etherscan, was 234641.4812 GH/s.
Pressure on miners, therefore, becomes very strong, and in this regard, the opinion expressed in August by the co-founder of the mining pool of Atlantic Crypto, Brian Venturo, is of interest. According to him, at an average price of $0.12 per kWh, the cost of extracting one ETH is $152, and this is only the cost of electricity, excluding the cost of equipment, rental of premises, staff salaries and much more.
“If you assume an average electric cost of 12c/kWh (we literally made this up, this is one of the biggest risk variables in our analysis which we will talk about in a later piece), and with the Purchasing Power of 1 ETH currently equaling 1.27 MWh would equate to a value of USD 152 per ETH, the Network’s Intrinsic Value (NIV). The balance of value ($275 — $152 = $123) could be thought of as the Network’s Extrinsic Value (NEV).”
As the Trustnodes edition wrote then, in some areas of China, the USA, and Canada, electricity can be found for 5 cents, but even in this case, the cost of mining one ETH will cost $91. As of Tuesday morning, November 20, ETH is trading below $140, and thus we can conclude that the mining of this cryptocurrency is on the verge of self-sufficiency, if it has not already become unprofitable.
Also, the bitcoin hash rate has been decreasing in recent days – if at the end of August this figure reached 61,866,256 TH/s, then today, the total network capacity was estimated at 40,680,712 TH/s. This happens against the background of a decline in the price of the first cryptocurrency, which fell to around $4,500, as well as the ongoing “hashrate war” in the Bitcoin Cash network and the transfer of part of the bitcoin capacity to mining these forks.
The current situation, however, suggests that miners will sell cryptocurrency only to cover current expenses and keep the rest in anticipation of a market recovery. At the moment, it is also possible that the expected profit from buying crypto may be higher than from mining. This, accordingly, may soon stimulate the acquisition of cryptocurrencies and will have a positive effect on prices.