The price of Bitcoin (BTC) has dropped as low as $4,500 this morning, following a brief recovery rally to $6,000 over the weekend. Only a week ago Bitcoin (BTC) was trading over $8,000, and a month ago Bitcoin (BTC) was over $10,000. This sudden and drastic drop in Bitcoin’s (BTC) price has blindsided the mining industry and is setting the stage for a major mining crisis.
As discussed in a previous article on Crypto.IQ, miners were depending on Bitcoin’s (BTC) price doubling across the halving in order to maintain a healthy mining industry. At the time that article was written Bitcoin (BTC) was around $8,500, and now the price has essentially halved rather than doubling.
The rise in the Bitcoin (BTC) mining hash rate to record highs over 100 EH/s is exacerbating the situation. Essentially, it seems the mining industry was rapidly expanding its hash rate capabilities in expectation of a block halving rally, especially since Bitcoin’s (BTC) price was steadily rising during the first two months of 2020. The crash in Bitcoin’s (BTC) price this past month was simply unexpected.
If Bitcoin’s (BTC) price stays at current levels or falls even further by the time the halving occurs in the middle of May, it will lead to a chain reaction of bankruptcies and farm shutdowns across the mining sector, inducing a collapse in the Bitcoin (BTC) mining hash rate.
It remains to be seen if that will happen. There is still a chance that Bitcoin (BTC) will rally before the May block halving.