Bitcoin mining could turn green in a few months despite bear market

Bitcoin mining could turn green in a few months despite bear market

The cryptocurrency market is going through a bearish wave whose blows hit the entire ecosystem, including Bitcoin mining. It is inevitable that every aspect of the Bitcoin and cryptocurrency universe will be affected by the impact of a price drop of more than 50% from the all-time high of 2021. Back then, bitcoin (BTC) surpassed $60,000 per Unit. Instead, today, Bitcoin is struggling to stay above $20,000.

It is not the first time that bitcoin has fallen and dragged the market with it towards depths from which it had long ago moved away. One of the most dramatic bear seasons came in 2018; just after having closed 2017 with an unprecedented record price. Back then, 1 BTC went from $900 in early January to $20,000 in mid-December. However, there the bubble burst and everything began to plummet.

Between January and December 2018, bitcoin fell from $17,500 to $3,000. That is, a collapse close to 80%. Compared to 2018, the current Bitcoin crash has not reached such a serious level, although many Wall Street investors believe that 1 BTC is likely to hit $10,000, as reported by CriptoNoticias recently. If that were the case, the bearish part of the cycle would almost completely repeat itself.

In Bitcoin mining there are also patterns that go hand in hand. On the one hand, the movements of the market and on the other, the situation of the network. Miners, in addition to worrying about the price of BTC, must also be attentive to technological aspects such as the hash rate of the network (hashrate) and its mining difficulty, among others.

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The Bitcoin market and mining in 2018

2018 was one of those years when those who claimed that the price of bitcoin would go to zero raised their voices. Despite their attempts to break out of the bear market in March, May, August and September, the resistances were getting lower and lower.

Bitcoin mining could turn green in a few months despite bear market
The price of Bitcoin fell almost 80% during 2018. Source: CoinMarketCap

For its part, the hashrate of the Bitcoin network showed a graph opposite to that of prices. Mining power quadrupled throughout 2018 and rose from 11.8 EH/s to 41.3 EH/s. His highest point was reached in the month of October, when he reached 64.1 EH/s.

Bitcoin mining could turn green in a few months despite bear market
Bitcoin hashrate fell after its 2018 high, but recovered in time. Font:

Something that is striking is that, despite the progressive rise in hashrate throughout 2018, companies such as Bitmain, manufacturer of the ASIC Antminer miners, and TSMC, manufacturer of the microprocessors used in various mining hardware models, reported significant losses. this year. One of the theories that was handled about the possible causes for this, at least in the particular case of Bitmain, was an overproduction of mining devices, to which was added the fall of the market.

Contrasts between the market and Bitcoin mining in 2018 and 2022

The current cryptocurrency market may look similar to that of 2018 due to its downward trend. Although, as mentioned above, he has not reached the bottom of last time (in percentage terms) compared to his ATH.

The current market downturn did not start this year, but in mid-2021, when the all-time high became a selling opportunity for many investors and burst the bubble. However, it is during 2022 that its effect on the bitcoiner ecosystem has been magnified.

Bitcoin mining could turn green in a few months despite bear market
The price of Bitcoin has not fallen as much as in 2018 in terms of percentages. Font: CoinMarketCap

A common factor between the graphs of 2018 and the current one, in addition to the rise in hashrate totally contrary to the downward trend of the market, is that the Network mining power dropped sharply right after achieving the ATH.

Bitcoin mining could turn green in a few months despite bear market
The Bitcoin hashrate has been falling in recent weeks, after maintaining an upward average for several months. Font:

The mining hardware market of 2018 and the current one have something in common: both have been hit by the low profitability of mining. However, today there are other mining flanks under attack from external factors. On the one hand, there is the global economic and energy crisis. On the other, although it is a consequence of the first, the increase in the cost of electricity, the main resource for mining Bitcoin.

Bitcoin mining could turn green in a few months despite bear market
The drop in mining profitability also affected the price of mining hardware. Font: Hashrate Index

The sum of these factors puts to the test the ability of miners to reinvent themselves and their will to remain operational. The drop that hashrate has been experiencing shows that many large miners are shutting down their farms partially or completely, at least until the profitability of this activity improves for them.

The Bitcoin mining loop

The comparison between the evolution of mining during the bear market of 2018 and the current one shows hope. If it were a cycle that is repeating itself, Bitcoin mining should start to show signs of recovery in a few months, at least in terms of network hashrate.

It is very important to note that, in a niche like Bitcoin that could still be considered young, nothing can be taken for granted and any type of investment involves high risks of loss. Therefore, anyone who is considering entering the world of mining soon has an obligation to research as much as he can on this topic.

As for the profitability of mining, it is a bit more complicated to try to predict its evolution, since there are many protagonists outside of Bitcoin and its technology that play an important role in the cryptocurrency exchange market and in society in general.

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