Head of operations at Genesis Mining, Philip Salter, believes that current economic meltdown may lead to a growing value for Bitcoin as a hedge against the banks.
The events of these couple of weeks, has upset a lot in the Bitcoin world. First, the sharp decline in hashrate, followed by an even more graver price drop. This was particularly troublesome in view of the impending halving.
While speaking with one of the most prominent figures in the Bitcoin mining space, Phil Salter, explained how minners played a role in recent market decline.
“As a miner you have bills to pay, you have to pay for electricity, for operations; and your expenses are in dollars, It’s no different from traditional markets. So as the price of bitcoin is dropping you have to sell everything to keep the operations going, to pay off your debts. It means you may have to sell more of your inventory just to keep going.”
Until it reaches a snowball effect —by snowball effect, we mean that as price falls, miners are forced to sell more of their inventory so as to keep going, and as they are selling more — the surplus in supply drags the price further down. Although, there is a point when for a given miner, it makes more sense to shut off electricity and stop further production until markets begin to recover.
Despite all these looming news surrounding the Bitcoin (BTC) due to recent events, Salter believes that:
“If this economic crisis is contained, then it will not have major implications for Bitcoin. However, if there is a real collapse, then the interest in Bitcoin will explode. It will go back to being seen as a hedge against the banking system. The more skepticism people will have in the old economy, the more they will flock to Bitcoin.”