China's earliest Bitcoin pioneer and founder of F2Pool (the world's largest Bitcoin mining pool), "Shenyu" Mao Shixing, posted on Thursday (July 4) that increasing numbers of ASIC mining machines are operating at a loss—falling below their shutdown price—signaling an emerging entry opportunity for investors.
Market Context: Bitcoin's Recent Decline
Bitcoin briefly fell below $54,000 during Asian trading hours on Friday, hitting a four-month low. This drop was partly driven by news that former major crypto exchange Mt. Gox transferred 47,229 BTC from cold storage.
F2Pool noted: "With Bitcoin's price below $58,000, what is the current mining profitability? At $0.08/kWh, ASIC miners with efficiency below 23 W/T are now unprofitable."
Key Observations:
- Break-even threshold: Antminer's four models and one Avalon model remain profitable only if BTC stays above $53,100.
- Miners nearing capitulation: Primitive Crypto partner Dovey Wan stated that Bitcoin miners are "one step away from surrender," with the S19's break-even point at $52,000—a potential indicator of a local bottom.
Why Mining Shutdowns Signal Opportunity
Shenyu emphasized optimism despite market conditions, posting: "When mining machines shut down... opportunities emerge."
Three Phases of Market Adjustment:
- Supply reduction: Fewer active miners decrease network hash rate, slowing new coin production and potentially stabilizing prices.
- Psychological reset: Panic selling often accompanies shutdowns, creating undervalued entry points.
- Technical recalibration: Remaining miners benefit from difficulty adjustments, improving ROI for new investors.
Strategic Considerations for Investors
Risk Management Essentials
| Factor | Action |
|---|---|
| Volatility | Allocate only risk-capital |
| Diversification | Balance crypto with traditional assets |
| Technicals | Monitor support/resistance levels |
| Psychology | Avoid FOMO during rallies |
👉 Master crypto risk management
Long-Term Positioning
- Accumulation phase: Dollar-cost averaging during lows.
- Macro trends: Institutional adoption continues post-halving.
FAQ: Mining Shutdowns and Market Cycles
Q: Why do mining shutdowns precede rallies?
A: They indicate excessive bearish sentiment, often marking cycle lows before hash rate recovery.
Q: How long do shutdown phases typically last?
A: Historically 2-8 weeks, depending on price rebounds and energy cost adjustments.
Q: Should retail investors mimic miner behavior?
A: No—miners face operational constraints; investors should focus on asset fundamentals.
Disclaimer: This content represents the author's perspective only and not financial advice. Cryptocurrency trading carries substantial risk—consult a licensed advisor before investing.