Thread by @jamesmcavity

Let's take a look at the mining death spiral FUD, kids!

At $.05 KW/h 1 S9 makes about $1 of profit per day at $3800/BTC.

$.06-$.08 are still profitable under these conditions, $.09 is not.

The breakeven cost here for $.05 KW/h is $2300/BTC, a 40% sell-off from here. (read on)

As we drop to $2300, let's assume miners at $.06-.08 drop off gradually, if hashrate is trending downward, there is a financial incentive for breakeven or small-loss miners to continue hashing. The next difficulty adjustment will help them stay afloat + increase profitability

Take a look at energy markets for the cues here. Do unprofitable producers turn off their drilling rigs the second they dip into the red? NO. Many are locked into leases that require them to drill or they have cash reserves to weather the storm. They can also hodl, and many do.

Mining setups are similar; facility leases, power purchase agreements, hosting agreements, you can't just shut em off whenever you want.. unprofitable production often requires a sustained period of losses to actually go bye bye.

In energy markets there is no beneficial effect to continue producing, more supply = more downward pressure on the price. In BTC, if continuing to hash accelerates the next downward adjustment in difficulty then ABC mining co's unprofitable production actually helps their biz.

In conclusion:
- Miners won't behave economically rationally up to the minute, they will try to survive
- Short term "keep em running" incentives exist for slightly unprofitable operations
- Those who do survive will benefit incrementally from the death of others

The system is well thought out and resilient, we gonna be aight