As a recap, as Satoshi said himself rightly pointed out that commodity costs are likely to gravitate to production cost.. why? Because miners will sell into demand where revenue per unit > cost per unit. Likewise, collectively they are disincentivized to sell when revenue < cost.
So what happened in 2018
- Sell off to Marginal Cost
- Race to the bottom of most efficient miner
- Eliminate Inefficent competion
- Utilize to lock in profit
Where did that leave us
- Inefficient miners eliminated
- Disincentive to Sell
- Incentivised to limit output sale
- Push price to 2x production pre halving
- Simple to do due to huge short interest
- Disincentive to sell below new production cost
- New bottom 2x old bottom
Whats likely to happen next
Action most likely from miners:
- Sell production / Hedge down while existing MC is still low
- Limit selling pre halving to envoke new halving bubble back to current prices
- Limit sale of production
- Maximise revenue per unit
- Sell new bubble
This ofcorse is a theory but this theory did exactly what it said on the tin last year. We have also seen the pre halving hype bottom out at 2x the cycle bottom.
Some analysis suggests that China now no longer mines most Bitcoin (though it is owned by Chinese pools), eg: https://thenextweb.com/hardfork/2019/02/27/3-countries-50-perecent-bitcoin-network/
If this is correct, and electricity costs of mining a Bitcoin provided here are correct: https://powercompare.co.uk/bitcoin-electricity-cost/
Then the average cost of mining one BTC may be closer to $10,000. What do you think?
And of course, next year’s halving would effectively double this.
Assuming it is true, there is no reason there couldn't be Chinese owned pools, operating in other countries.