Ethereum’s hashrate has fallen to its lowest level since February, down now to 236 terahashes a second from a high of 297 TH/s reached in August.
Until August, ethereum’s hashrate only kept increasing, but since then it has only known down, nearing now a 25% drop.
That suggests ethereum miners are hurting and badly. One industrial miner, for example, said back in August that electricity costs alone stand at $152 to mine one eth.
There’s of course hardware costs and other costs, such as real estate or storage at an industrial scale, employees, taxes, and plenty else.
That $152 for energy is however at a cost of 12c per kWh. In some areas of China and in some areas of the United States, you can get electricity at about 5c.
That means at the lowest end, mining one eth can have energy costs of about $91. If we add other costs, then even at 5c eth mining is currently at a loss.
That could mean two things. First, there’s less sell pressure from miners as they’re now no longer selling eth to buy more hardware. Instead they’re probably holding and/or selling the minimum to just cover costs.
Second, just buying eth may now have a higher Expected Value (EV) than mining it. This calculation is a bit difficult because the hardware can keep on mining, but if such mining is at a loss, then simply buying eth directly might save some money.
Logically thus you would think that the sell pressure on eth from miners is now at a far reduced level than perhaps any time this year.
Ethereum’s inflation rate, however, remains very high at about 7%, which may be the main reason why it has fallen more than the other top coins this year and even today, with eth down 12% while BTC and even BCH is down “only” 7%.
The latter have an inflation rate of about 4%, which was the level eth was meant to gain this November with Metropolis, but that will now hopefully go live in January.
Eth’s inflation will then be reduced further once the Proof of Stake Beacon Chain launches to about 2%. A level BTC and BCH will gain once they have their halving in late 2019 or in 2020.
For now they all have a higher level of inflation than even fiat, but that will soon change with the top cryptos headed for close to no inflation at all in money supply.