Bitcoin's price, at the time of writing, was $21,919.90, a drop of more than 15% in a single day. Far from the peak price of $64,000 touched in November, or the $100,000 it aimed to reach in 2022.
Other cryptocurrencies, such as Ethereum, do the same: today it is worth $1,186, also 15% less than yesterday.
In the case of Bitcoin, this is not just another drop: it has fallen below the "freezing point" that some experts have set to make it profitable to continue mining cryptocurrencies, or maintain the network.
What is the reason for today's huge drop? In addition to the problems that cryptocurrencies have faced in recent months, related to the ban in some countries, the invasion of Ukraine and the commodities and fuel crisis, there is the fall of the Celsius network yesterday.
This is a major coin lending platform, which froze transactions of its customers due to lack of funds due to the torrent of sales, and the fall of its CEL coin. The same happened to Binance, which had to stop its operations for more than an hour, although it has now resumed.
Why is this Bitcoin drop so important? It is estimated that the network that runs Bitcoin consumers between 180 and 200 TWh. That's more electricity than entire countries the size of Ireland or Argentina.
Three months ago, Alex Vries, an economist and bitcoin expert, conducted a study in which he stated that if the price of bitcoin falls below $25,200, the cost of electricity needed to maintain the mining equipment and manage the blockchain will approach that earned by mining new bitcoins and managing the blockchain. Today, bitcoin is worth less than $22,000.
Simply put, miners are approaching zero. Without interest, many miners would consider going out of business and the bitcoin network would not be able to sustain the 180 TWh of consumption it currently needs.
"We have reached price levels where things get difficult for miners," Alex Vries explains. "This no longer only limits the possibilities for increase, but also has an effect on day-to-day operations."
Does this mean bitcoin will go under? Not at the moment. It will take several weeks for the price to stay below the "freezing point" until the risk becomes real. Even with less power and fewer nodes on the network, bitcoin can still function, albeit at a slower pace.
This was an unimaginable scenario just six months ago, so no one is sure of anything. But as long as the Ukraine invasion continues and the commodities and fuel crisis is not resolved, the outlook for cryptocurrencies will be complicated.