The founder of Capriole Investments emphasized that Bitcoin is at the threshold of a zone that has historically provided the best long-term opportunities.
Bitcoin has returned to production costs
In the fresh one post on X, Capriole Investments founder Charles Edwards noted that Bitcoin had returned to production costs. “Cost of production” here refers to a metric that estimates the global average cost in USD of producing one cryptocurrency token per day.
BTC uses a consensus mechanism called proof of work (PoW), in which validators called miners compete with each other using computing power for a chance to add another block to the chain.
Currently, blockchain is so competitive that the average miner needs a ton of machines to have a chance of making a profit. Establishing mining farms can require significant initial investment, but whether a miner can earn an income is determined by the cost of maintaining these facilities. Maintaining high computing power is usually exorbitant, and the main expense is electricity bills.
As the chart below shared by Edwards shows, the cost of producing Bitcoin is currently around $62,650.
This level refers to where the Bitcoin spot price is currently located. So, if the estimated metric is anything to go by, miners simply break even in their operations.
Following this development, BTC is currently on the border of a zone that has been significant for the cryptocurrency in the past. “Historically, the best opportunities for long-term value have been between this area and the cost of electricity, currently $50,000,” the analyst noted. “Electricity cost” here means the total cost that miners pay for electricity alone. This level has served as a sort of floor for Bitcoin in various cycles.
The cost of production suggests that miners are currently under pressure. How do they react to it? A metric that can be useful for tracking miners’ behavior is Hashrate, which tracks the total amount of computing power connected by these validators as a whole.
According to data from CoinWarzthis rate has recently dropped.
From the chart you can see that Bitcoin Hashrate is currently around 837 exahashes per second (EH/s). In May, the indicator frequently fluctuated around 1,000 EH/s, which was more than 19% above the latest level. Therefore, it appears that some miners disconnected from the network in response to the bear market.
BTC price
At the time of writing, Bitcoin is trading at around $62,400, down 9.5% over the past week.
