Crypto miners set to lose out as Bitcoin tumble continues
Crypto miners are feeling the effects of negative headlines exposing market manipulation during last year’s meltup, with Bitcoin prices continuing to slide.
Last week the Coinrail hack prompted South Koreans to dump their crypto, Bitcoin and Ethereum. As ETF Daily News reported, this broke critical technical support levels (BTC $7,000; ETH $600).
There has been little respite since. Monday started calm but then a story broke in the US that according to research from the University of Texas, Tether, one of the most-traded cryptocurrencies, indicated a pattern of being spent on Bitcoin at pivotal moments, thereby pushing BTC to a record price in December.
Bitfinex Chief Executive Officer JL van der Velde disputed the claims : “Bitfinex nor Tether is, or has ever, engaged in any sort of market or price manipulation,” Adding “Tether issuances cannot be used to prop up the price of Bitcoin or any other coin/token on Bitfinex.”
However not everyone is satisfied with these assurances. Texas University Finance professor John Griffin said: “I’ve looked at a lot of markets,” he said. “If there’s fraud or manipulation in a market it can leave tracks in the data. The tracks in the data here are very consistent with a manipulation hypothesis.”
Investors have undoubtedly been alarmed by the claims and the plummeting price of Bitcoin has forced miners into a corner. According to CoinTelegraph the crypto has now fallen below what some analsysts believe to be an average BTC mining profitability threshold of $6,500.
According to a report on CNBC today, this figure assumes that Bitcoin miners need to update their hardware almost every 18 months, bringing the costs of mining to roughly between $5,900 and $6,000.
Bloomberg’s Gadfly points out that the 70% price drop since the mid-December high $19,345 has cut profitability to the bone. With the cryptocurrency falling ever nearer $6,000 (currently $6,513), only the largest and most efficient miners can survive and even they are on treacherous ground.