Bitcoin Price Tows the Line Above $6,600; Mining Becomes Unprofitable for the First Time
Bitcoin resumed its narrow-bound trading on Tuesday, though prices remained well supported above a key trend line following a modest breakout at the start of the week.
The price of bitcoin fluctuated within a $57 range on Bitfinex, marking one of the lowest volatility days of the year. At press time, BTC was valued at $6,630, having declined roughly 0.6% from the previous day.
The leading digital currency surpassed $6,700 on Monday for the first time this month, though lower volumes kept the rally caps in check. Bitcoin remains firmly entrenched in a long-term bear market as markets struggle to overcome significant barriers at $6,800 and $7,000. Anything above that has proven more elusive since the back half of summer. On the opposite side of the spectrum, market participants have established a firm price bottom of $6,000, which is commonly associated with bitcoin mining costs.
At current prices, bitcoin is capitalized at $114.6 billion, which accounts for 52.4% of the entire cryptocurrency market. Trading volumes over the last 24 hours amounted to $3.6 billion, according to CoinMarketCap. The overall market is valued at $218.8 billion, little changed from last week.
Record Volumes, Dwindling Profit
While bitcoin stands little chance of repeating its 2017 bull market, prices today are roughly 40% higher than they were just a year ago. This means bitcoin mining is still a potentially lucrative endeavor for firms and individuals capable of absorbing short-term pain for long-term reward.
According to cryptocurrency publication Diar, there are 54,000 bitcoins up for grabs each month. For miners, rewards and fees represented $4.7 billion in revenue through the first three quarters of 2017, exceeding all of last year’s haul by $1.4 billion. However, record hash rate has contributed to a sharp rise in retail electricity prices, which made mining unprofitable for the first time in September. That said, Diar does not expect current conditions to last.
“It’s unlikely then that the recent tapering out of the Hash power to last,” the publication latest reads. “With big mining operations on low electricity costs running at anywhere between 50-60% gross profit from Bitcoin revenues, the market has a lot of room left to grow and, profits to squeeze. But Bitcoin mining has, at least for now, and most likely in the future, moved into the court of bigger players with deep pockets.”
Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.
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