No Bitcoin Will Be Mined If Its Price’s Below $8,600, Morgan Stanley Warns

No Bitcoin Will Be Mined If Its Price’s Below $8,600, Morgan Stanley Warns

On Thursday, April 19, bitcoin traded at a rate slightly exceeding the margin of $8,200, as per Coindesk data.

It is known that the price of each BTC unit plays a crucial role in the revenues of bitcoin miners. Recent analysis, conducted by Morgan Stanley experts, has shown that the margin that will make all the work of miners unprofitable is $8,600.

Miners Might Stop Generating Bitcoin

Within the past few months, the king of all cryptos barely managed to step on the path of recovery after it plummeted from the point of $19,000 in mid-December. And if it keeps going down, it is likely that miners will stop creating new units as long as it will no longer be profitable for them, CNBC reports.

In a special note, the equity specialist Charlie Chan stated:

"We estimate the break-even point for big mining pools should be US$8,600, even if we assume a very low electricity cost (US$0.03 kW/h). Therefore, we think the Bitcoin mining hardware demand and price will decline further and affect TSMC's wafer demand."

Here are the break-even points for BTC production, according to Morgan Stanley Research:

  1. Hardware cost
    • Retailer - $1,050
    • Large-scale mining farm - $1,050
    • ASIC vendor - $450
  2. Daily revenue at bitcoin price = US $7,000
    • Retailer - $7.05
    • Large-scale mining farm - $7.05
    • ASIC vendor - $7.05
  3. Electricity cost (per kWh)
    • Retailer - $0.05
    • Large-scale mining farm - $0.05
    • ASIC vendor - $0.03
  4. Daily profits
    • Retailer - $5.40
    • Large-scale mining farm - $6.06
    • ASIC vendor - $6.06
  5. Snapshot payback period (days)
    • Retailer - 194
    • Large-scale mining farm - 173
    • ASIC vendor - 74
  6. Two-year breakeven point
    • Retailer – approximately $10,200
    • Large-scale mining farm – approximately $8,600
    • ASIC vendor – approximately $5,000

It is remarkable that Taiwan Semiconductor Manufacturing (or TSMC) descended its earning recommendation for this year to 10% growth on April 19. And it was based on the ambiguity in the cyber money creation demand.

Morgan Stanley assesses that around 10% of the titan Asian chip producer's earnings now rely on the digital assets mining demand.

As it is known, the production of bitcoins requires the use of a lot of computing power. Without it, the sophisticated math equation would not be solved. Therefore, bitcoins would not be mined as these equations help to prove that an anonymous miner used the process that the net agrees upon to generate the record of financial operations on the blockchain. Apparently, for the successful completing of the equation miners receive their award – also a unit of BTC.

Usually, if there are lots of miners, the “pools” are created (like in China). It helps to enhance the effectiveness of their work. However, the more miners join the process, the harder it becomes to handle everything.

Concerning the issue, the Morgan Stanley experts said:

"We think the injection of new mining capacity will further increase the mining difficulty in 2H18. Even if the Bitcoin price stays the same in 2H18, we believe mining profits would drop rapidly, according to our simulation."

Canada Reports Blockchain To Be Amongst Its Highest Paying Industries
A report recently published by the Canadian Digital Chamber of Commerce proves that the money involved in the blockchain industry of the nation is at...
KodakONE Blockchain Beta Test Generated $1 mln in Content Licensing Claims
More than $1 million — this how much in licensing claims KodakONE, a dev of DLT-based image rights platform, has generated. Certified by the American...
UNICEF Funds Six DLT Startups to Solve Global Issues
UNICEF is both crypto- and blockchain friendly. A few months ago the French leg of UNICEF said it was accepting donations in nine types of...
Facebook Has Opened 5 Blockchain-Related Vacancies
More than half a year ago social media titan Facebook set up a blockchain group to explore how to employ this technology to the maximum advantage of...
Seven Southern European Countries Agreed to Promote Blockchain
Seven countries of Southern Europe signed a declaration in which they commit themselves to promote blockchain. These countries are Cyprus, France...
Amazon Embraces Blockchain Despite The Dip on Crypto-Market
Even as crypto-market plunged from nearly $830 billion in January to $121.5 billion this week, the leading e-commerce company sees an opportunity in...
Microsoft Releases Dev Kit to Connect Users to Blockchain
The American technological titan Microsoft has finally introduced its development kit dubbed Azure. Azure functions without a server and is powered...
JPMorgan: Investors Should Keep an Eye on These DLT-Friendly Companies
If you are an investor, it might still be challenging for you to get exposed to DLT, unless, for sure, you are purchasing bitcoin. To ease the life...
Blockchain Engineers Make As Much As AI Specialists
Engineers working in the blockchain domain are as demanded as those who work on artificial intelligence. Such a conclusion can be made from the...
Blockchain Market Could Be $7 bln and Boost Amazon, Microsoft, BofA Says
Novel estimates from one of the most influential investment banks in the world — Bank of America — showcase unalterable ledger spread will be of use...