Yesterday, Blockstream’s founder and renowned cryptographer Adam Back, in an interview with Bloomberg, mentioned that Bitcoin could potentially surpass $100,000 before the halving event in the first half of 2024.^1
Surpassing the previous high before the halving event is an unprecedented occurrence in the Bitcoin’s development history of the past decade.
However, this cycle is not typical. This is because the previous high was relatively “low.” The difference of more than twice from the current value of around $30,000 to the previous high of $69,000 is remarkable. The introduction of a spot ETF could generate enough demand impact.
In a post on August 5th, Adam Back quoted an article from Cointelegraph, stating that “After the April 2024 halving, the price of Bitcoin needs to exceed $98,000 to prevent miners from operating at a loss” ^2, and he made a calculation: If the network’s hash rate continues to grow at the rate of 6.3% per month as it did in the first half of 2023, it would reach 633 EH/s by April 2024. Currently, the fee income is about 0.16 BTC per block, in addition to the block reward of 3.285 BTC. This implies that a mining facility with a power consumption of 30 J/TH and an electricity cost of 6 cents per kWh would require a Bitcoin price of $58,000 to achieve breakeven.^3
$58,000 is the cost price. With a premium, exceeding the previous high of $69,000 and even surpassing $100,000 is not out of the realm of possibility. When compared to the current production cost of approximately $7,200 to $18,900^4, the market price is currently almost $30,000.
Why is the market willing to pay such a high premium for miners? Just as Satoshi Nakamoto mentioned on a forum on February 21st, 2010, “This indicates that people estimate the present value to be higher than the current production cost.” The present value represents the discounted future expectations, and the higher the expectations for the future, the higher the discount.
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