Are miners entering "surrender mode" due to the epidemic and halving?

As the Bitcoin halving approaches, cryptocurrency mining “death spirals” and miner capitulation have become a hot topic among digital currency enthusiasts.

A recent report from cryptocurrency data service provider Coin Metrics shows that Bitcoin is in the vortex of "miner capitulation". Although the price of Bitcoin has rebounded by more than 70% in just two weeks after hitting a low of $3,700, for some less efficient miners, the current price of Bitcoin is still below the "break-even point", so Coin Metrics expects Bitcoin miners to enter "capitulation mode".

The company concluded that miners are entering a cycle where profit margins will decline, selling will increase, and as some miners capitulate, some of the least efficient miners in the Bitcoin mining network will be eliminated. However, once this cycle is complete, the Bitcoin mining industry will return to a healthy state and be able to support future price increases.

Christopher Bendiksen, head of research at Coinshares, published a research report that suggests the opposite. He said: "(Bitcoin) mining death spirals do not actually happen in real life" and that such speculation is a "highly theoretical edge case."

In a recent podcast, Blockware Solutions CEO Matt D'souza discussed and analyzed the recent selling pressure on BTC. He said that when the price for miners is below the break-even point, he will have to sell Bitcoin every month to pay for expenses such as electricity and mining machine maintenance, which puts a huge pressure on the network.

D'souza further stated that there are three participants in the Bitcoin network: investment funds, coin holders, and miners. All three are very bullish to a large extent, but miners are the most bullish because they are buying mining machines and building infrastructure with a life cycle of three to five years. Although they are in trouble now, they are the ultimate bullish party.

Many believe that the “bottom” was on March 12. Even some long-term holders sold BTC during the panic. But it seems that there are many bullish analysts at the moment, and there are also voices pointing out that most of the crypto industry is bullish for the rest of the year. There are two perspectives to consider when evaluating the short-term value of Bitcoin. On the one hand, there are internal factors such as mining profitability and the upcoming halving. However, on the other hand, some macroeconomic factors are currently front and center in this global economic crisis. It is difficult to balance these two factors to evaluate future market trends, to say the least. Therefore, short-term forecasts are as volatile as the market itself. If miners capitulate and use this rally to lock in profits, then the market will need a lot of new funds to absorb this selling pressure. But so far, this bearish expectation is broken by our current bullish reality: Bitcoin once broke through $7,400 today.

Although there are different opinions on the mining industry, it is important to realize that mining is a dynamic equilibrium process. Efficient miners welcome the halving. The increase in Bitcoin difficulty causes most small miners to shut down, so that there is less competition and it is easier for miners who persist to "win."

D'souza also called Bitcoin mining a "self-correcting" mechanism: "In the Bitcoin network, everything is controlled by code, even the monetary policy. When people (miners) become inefficient, they shut down (during the halving period), the difficulty will adjust, and the rewards that originally belonged to these miners will be distributed to those miners who stick with it, who will get more Bitcoin and be able to ensure the security of the network."

So what are the factors that miners should pay attention to now? For those who are trying to enter the market, is the time gone? Johnson, chief analyst of TokenInsight, pointed out in an interview with Golden Finance: In extreme cases, it is a process of reshuffling the entire mining industry. There are many pitfalls in mining that miners need to pay attention to. I once said that mining without strategy is digging pits. For those who are trying to enter the market, the opportunity is still there, but you need to have a deep understanding of the risks in various details, not just looking at the most basic data such as price, difficulty, and payback period, but learning to understand deeper strategies, data, and perspectives. Only in this way can you have a more comprehensive understanding of the mining industry. After the entire mining industry is reshuffled, the requirements for miners will be higher. (Golden Finance)