Comment by reenorap
16 hours ago
If bitcoin miners are losing $19k for every bitcoin they mine, why would they sell bitcoin to continue funding their mining operations. That just makes it even less profitable because they are driving down the price of their remaining bitcoin. It makes more sense to shut their rigs off completely and wait for the price to rise.
The funny thing about bitcoin is that the rate of bitcoin discovery doesn’t change when they shut off their rigs so it won’t change supply. It would actually make more sense to sell all their bitcoin, flood the market with coins to do the price, wait for large miners to collapse and then restart mining at hopefully lower prices.
> […] why would they sell bitcoin to continue funding their mining operations […]
There are usually some fixed costs involved and you need cash flow. Without cash flow, your business can shut down pretty damn fast. With cash flow, your business can stay around longer, maybe long enough for the economics to shift.
This sort of thing happens with oil. There are oil producers which sell at a loss. There was even a brief moment when the price of an oil barrel went negative, which meant that if you gave somebody a barrel of oil, you had to pay them for the privilege of taking that oil off your hands. Oil producers did not all shut down when that happened.
I am a little doubtful of the $19k figure anyway.
> It would actually make more sense to sell all their bitcoin, flood the market with coins to do the price, wait for large miners to collapse and then restart mining at hopefully lower prices.
This kind of market manipulation is not so straightforward.
> There was even a brief moment when the price of an oil barrel went negative
More accurate: The price for an _option_ to buy/sell oil was negative, not the price of the barrell itself.
No, the price of a contract for future delivery to a specific location went negative just before the delivery date, at a time when there was almost no unoccupied oil storage nor transport capacity at said location.
In that circumstance you might sell your right to some oil for almost nothing rather than deal with the consequences of accepting it. You might even pay someone to take it off your hands.
Options is “right but not obligation”. Physically settled futures are an obligation at maturity.
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How could the option price go below 0? Why couldn't someone just not exercise it in that case?
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