Bitcoin traders and on-chain indicators are suggesting that the cryptocurrency has hit its bottom and is now a “generational buy” opportunity. However, the price of Bitcoin is still in a downtrend, and the metrics do not fully reflect the fact that traders are buying every dip. In order to gain clarity on what’s happening in the mining industry and how it might impact market sentiment, Cointelegraph spoke with Rich Ferolo of Blockware Solutions and Will Szamosszegi of Sazmining Inc.
Szamosszegi recommends a dollar-cost-averaging strategy for Bitcoin investment and points out that Bitcoin has always made gains over any four-year period in its history. Ferolo explains that the breakeven price for Bitcoin mining varies depending on the type of machine being used, but overall, the value of machines is going down. He believes that the current price consolidation point is cleaning up the amount of mining debt that exists and predicts a severe lack of infrastructure in the space.
Both Ferolo and Szamosszegi agree that the Bitcoin mining industry is going through a period of consolidation, with leveraged miners going under and inefficient miners turning off their machines. Equipment is being sold at lower prices, creating opportunities for bigger players to consolidate and buy miners at a discount. Ferolo advises against setting up a mining operation at home unless you have a significant investment, as the infrastructure requirements are high.
The recent drop in Bitcoin’s price below its all-time high does not have any significant future ramifications on the fundamentals of the asset and industry, according to Szamosszegi. He believes that the fundamentals of Bitcoin are unchanged and expects it to evolve into a global reserve asset. Ferolo acknowledges that the recent crash has generated a lot of bad press for the crypto industry, but believes that this is an opportune time to buy and invest in Bitcoin.
Looking ahead, the next reward halving event for Bitcoin is approaching, which may induce miner capitulation. However, both Ferolo and Szamosszegi believe that the halving events wash out inefficiencies in the mining industry and that miners will continue to seek out cost-effective energy sources and improve the efficiency of their equipment.