Atulya Sarin is a professor at the Business School in Santa Clara, California. In April, when Bitcoin stood at $ 7,000, Sarin had already posted a comment portraying the future of Bitcoin. If the price falls below the cost of mining, it could mean the demise of Bitcoin, he wrote. Now, after another 45-percent contraction, Sarin believes his thesis is now confirmed.
In a recent opinion statement on the MarketWatch website, Sarin writes that Bitcoin is in a “death spiral” to a “quick and painful descent to zero”. The course is meanwhile less than the probable mining costs. The miners would exit the market with it.
Here's how it works:
“Mining at a cost greater than the price one can achieve on the futures markets , destroys the value. Thus, any rational investor – even if he believes that Bitcoin recovers in the future – has no incentive to mine. The cost of mining is higher than the future price and it is more economical to trade in the futures markets. Unlike gold, which retains its value even when all mining activities are stopped, Bitcoin can have no value without mining. Only mining receives the ledger of the owner. Without mining activity, Bitcoin is just a set of encrypted numbers with no value. “
Bitcoin does not yet have universal recognition as a value store
Sarin succinctly ignores the fact that Bitcoin and others Proof-of-work cryptocurrencies automatically adjust the mining difficulty. Sarin merely states that the “mining costs are adjusted algorithmically,” but that does not necessarily happen to the same extent that prices fall.
Sarin further explains:
“Unlike gold, which has its status as a store of value probably due to a” historical accident “, Bitcoin is a digital good without universal recognition as a store of value. The original buyers and miners believed in the paradigm shift that it seemed to promise. They were ready to make the necessary investments for the future. However, the newer buyers and miners are simply the usual greed-driven investors. “
Sarin continues to paint a bleak picture of Bitcoin's future. However, Sarin obviously finds it too easy, especially in the important point of adjusting the mining difficulty. Just because the consistency of the network is so important to Bitcoin, bitcoin difficulty is adjusted so miners can only hash a block every 600 seconds.
For this reason, other negatively tuned observers are more cautious and admit that Bitcoin could also experience a rapid rise. Sarin, however, sees the descent as clear and predicts that the financial death of Bitcoin “fast” come. Stange investors are likely to answer that, “We'll see.”
Sources: MarketWatch 1, MarketWatch 2, Bitcoinmining.com, Pixabay
Author: Peter Joost – Source Post: https://www.kryptovergleich.org/professor-sieht-bitcoin-kurs-in-einer-todesspirale-unter-wertlosigkeit/
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