Will include a mining Bitcoin in a deadly spiral?

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The trend of mass closure of mining farms started to raise concerns cryptosuite that Bitcoin can enter the “death spiral” that will make it useless.

Recent publications about the situation that Bitcoin (BTC) can drop to zero because of the mass closure of mining farms that leave the network without computing. However, many experts believe that the total freezing of the network is unlikely.

Starting in 2013, mining Bitcoin actively increased with the use of powerful ASIC equipment and building mining farms in periods of rising prices meant an immediate profit. Some Bitcoins were sold for cash and the other through futures markets and speculative price increases exceed the costs of acquiring mining oborydovanie and energy costs.

Different break-even point of mining

But for the latest farm, built in 2018, the cost of mining Bitcoins may be higher than the reward per block. Several price levels determine the break-even point of mining, but all of the pools it is different. For some, the cost of production below $5800 will be unprofitable, while others can make a profit and at a price of $3800. It is difficult to assess the cost break-even production for each farm, especially since the equipment was acquired at different time stages.

Even if the miners will slow down its activities, it is unlikely that production units of Bitcoin will be completely frozen. It is believed that a large number of mining farms decided to close after the last adjustment of the difficulty, however, the network still continues to produce 2 016 units, although more slowly. Experts say that the reward for the block will not only reward the miners since fees will rise. In recent months, transaction fees in the blocks exceeded the amount of remuneration for the block in the amount of 12.5 BTC. This means that miners have an even better incentive to continue support transactions.

Even if many will abandon production at the same time, others will reap the fruits of success, and then may continue to mine BTC with a lower complexity and potentially the best reward.

If Bitcoin threatens oblivion?

We should not forget that originally, Bitcoin mining was conducted on the same computer belonging to Satoshi Nakamoto. Even if the majority of miners will stop mining, the network will always find new supporters. In addition, there is a theoretical possibility of creating a new mechanism of adjustment of difficulty, which is widely used at this stage some Althingi.

Even at about $3800 more Bitcoins can be threatened by other factors such as market speculation, and the prohibition by the governments of cryptocurrency activity, but the cessation of mining blocks is extremely unlikely.

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