Genesis Mining Sees Bitcoin as the New Gold If Economic Crisis Deepens

Genesis Mining Sees Bitcoin as the New Gold If Economic Crisis Deepens

Philip Salter, head of operations at Genesis Mining, believes economic meltdown can lead to Bitcoin growing in value as a hedge against banks to shine as the new gold.

There’s been a lot of turmoil in the Bitcoin world over the last couple of weeks. The hashrate declined rapidly, followed by an even more precipitous fall in prices. This was particularly disquieting given the imminent halving.

Miners Have Margin Calls Too

Speaking about whether miners have played a major role in the recent decline in the market, Salter noted.

“It’s no different from traditional markets, you have to sell everything to keep the operations going, to pay off your debts. As a miner you have bills to pay, you have to pay for electricity, for operations; and your expenses are in dollars, so as the price of bitcoin is dropping, it means you have to sell more of your inventory just to keep going.”

It’s a snowball effect up to a point, miners are forced to sell more of their inventory as prices fall, and as they sell more, the surplus in supply drags the price down further. There is, however, a point where it makes more sense for a given miner to shut down electricity and halt production until markets begin to recover.

Bitcoin Will be the New Gold

One of the most popular narratives of Bitcoin has always attempted to portray it as the new gold. However, by following the traditional markets trajectory, Bitcoin was breaking away from that narrative. Whether this latest setback will continue depends largely on the severity of the crisis, Salter believes:

“If this economic crisis is contained, then it will not have major implications for Bitcoin. However, if there is a real collapse, then the interest in Bitcoin will explode. It will go back to being seen as a hedge against the banking system. The more skepticism people will have in the old economy, the more they will flock to Bitcoin.”

Things are about to get even more interesting with the third Bitcoin having just 53 days away.

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