Confirmation Rate

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Asymmetry
Another major miner files bankruptcy as I predicted. At the end of the third quarter, Core Scientific’s assets stood at $1.4 billion, whereas its liabilities were about $1.3 billion. The bankruptcy of Core Scientific, which accounts for about 10% of computing power on the bitcoin network…
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Last December I described how the Bitcoin network might deteriorate as miners disappear.   Bitcoin absorbed significant money last month from the banking collapse, how has that affected my scenario?

At least 30% of miners went bankrupt in the past six months, so I guesstimate about 50% are gone.  Check out recent network performance.

Oh, my.  Confirmation time hit 943 minutes this week, which aligns with my prediction in December.   How are the miners doing at a $30k price?

Bitcoin energy consumption rose from 118 terawatts to 140 terawatts, a 19% increase in the past six weeks.  

Let's check energy prices...   commercial rates in 2023 ranged from a low of $0.08 to $0.22 in continental US.

Roughly 1/3rd of miners are in North America, 1/3rd in Europe, and 1/3rd in Russia/Asia.   Energy costs are highest in Europe and lowest in Russia so we'll guesstimate they average out close to the $0.09 per kwatt of the United States.

  • Miner income: 330K coins X $30,500 = $10 billion
  • Miner cost: 140 terawatts x $0.09/kwatt = $12.6 billion

Oh, my, again.  Even at a price of $30K, the network is probably still cash negative.

Fast forward to the 1st quarter of 2024.   Assume Bitcoin price rises to $50K, energy usage rises to 160 terawatts and energy costs rise to $0.10 / kwatt.   But... remember...  available bitcoins halve to 165,000 per year.

  • Miner income: 165K coins X $50,000 = $8.25 billion
  • Miner cost: 160 terawatts x $0.10/kwatt = $16 billion

A projected loss of $7.75 billion.  The annual loss in 2022 was $5-6 billion.  In 2024, Bitcoin will probably be in worse fiscal condition with more miners going bankrupt.  Watch the transaction confirmation rate.   Systemic failures often don't give advance warning but I expect another exodus of miners in early 2024 if price doesn't break above $50K.