Bitcoin futures failed to generate the interest of investors that so many people had hoped they would when CME Group Inc. and CBOE Global Markets Inc. offered them for the first time in December. Now they are getting unlikely support from cryptocurrency miners. In an attempt to hedge their bets miners are using futures as the price of mining continues to rise.
Investors are trying to recover from the massive losses that bitcoin suffered only a few months ago. The value of bitcoin fell by as much as 27% putting its future and sustainability in question.
Mining cost rise
Out of the maximum, 21 million bitcoins around 17 million have been mined so far, according to CoinMarketcap.com. As miners get closer to the limit, the more energy is required to mine bitcoin blocks.
In December bitcoin was worth nearly $20,000, and mining was highly profitable. At the time miners continued to mine as much as possible despite the rising cost of mining.
Only six weeks later miners were forced to exit the market when bitcoin’s value plunged by more than 65%. Bitcoin was worth just under $6,000, and mining revenue dropped by $40 million a day. Some miners tried to stay in the market and find less expensive sources of energy.
For a miner, to break-even, the value of bitcoin needs to be at $8,038. The price of Bitcoin was still below that amount on March 15.
Mining comes back as bitcoin recovers
Bitcoin’s value has started to come back and is currently surpassing $9,000. As bitcoin recovers, miners have come back to the market.
Officials at a mining facility based in Virginia said the company will keep up building capacity at all of its locations. Thomas Flake, founder and chief marketing officer at the company, said that the LLC is “fully subscribed” through September.
The future of Bitcoin seems to be bright again as investors have stuck with their commitments. Investors have kept their positions rolling instead of closing.