Data shows that bitcoin miner “hash price” has fallen to all-time lows, a sign that these chain validators could be under pressure.
bitcoin miners are about to become unprofitable
In its latest weekly report, the on-chain analysis firm glass node has analyzed some metrics related to miners to see how they are doing in terms of revenue right now.
Miners earn their income through two means: the block rewards they receive for solving blocks on the network and the transaction fees they earn for processing individual transfers.
The first of them remains fixed between halvings, while the second fluctuates depending on network activity. How much of these rewards an individual miner would end up getting depends on the competition present on the blockchain.
The “mining hashrate”, that is, the total amount of computing power connected to the network, can serve as a way to track the degree of competition among miners. The metric is measured in terms of exahashes per second (EH/s).
<img decoding="async" class="alignnone aligncenter" src="https://technicalterrence.com/wp-content/uploads/2023/09/Problems-for-Bitcoin-miners-Hashprice-falls-to-all-time-lows.png" alt="bitcoin Mining Hashrate” width=”2000″ height=”1152″/>
Looks like the value of the metric has been going up towards new ATHs | Source: Glassnode's The Week Onchain - Week 39, 2023
As shown in the chart above, the 7-day bitcoin mining hashrate has increased by 52% since February and has set a new all-time high. One consequence of competition among miners reaching a new high has been that the “hash price” has plummeted towards a new all-time low.
The hash price here refers to a measure of the total revenue that miners earn per exahash of their computing power.
<img decoding="async" class="alignnone aligncenter" src="https://technicalterrence.com/wp-content/uploads/2023/09/1695846075_59_Problems-for-Bitcoin-miners-Hashprice-falls-to-all-time-lows.png" alt="bitcoin hash price” width=”2000″ height=”1152″/>
The value of the metric seems to have declined recently | Source: Glassnode's The Week Onchain - Week 39, 2023
From the chart, you can see that the bitcoin miners hash price has been trending downward throughout the asset’s history, seeing only temporary deviations during bull markets as the price rise temporarily increases. the dollar income of the miners.
After the latest drop, the metric reached a value of $60,000 per EH per day. “The endless logarithmic decline in the hash price shows how ruthless and relentless the mining industry is,” the analytics firm notes.
As mentioned above, block rewards remain constant outside of periodic halving events, where they are halved. The reason for this consistency is due to the presence of the “mining difficulty” feature in the cryptocurrency code.
The network adjusts its difficulty to counter changes in hashrate and miners produce btc at the standard rate. When the hashrate increases, for example, the difficulty also increases in response, so miners cannot take advantage of their extra computing power to mine at a faster rate than the chain intends.
Glassnode believes that difficulty is the indicator that encapsulates all miner-related metrics into one, so it can be used as the basis for a miner production cost model.
According to the company’s “difficulty regression model”, the miners’ breakeven point currently stands at $24,300, which means that these miners are only making less than 10% profits at the moment.
<img decoding="async" loading="lazy" class="alignnone aligncenter" src="https://technicalterrence.com/wp-content/uploads/2023/09/1695846075_104_Problems-for-Bitcoin-miners-Hashprice-falls-to-all-time-lows.png" alt="bitcoin difficulty regression model” width=”2000″ height=”1152″/>
The miners are making little profits currently | Source: Glassnode's The Week Onchain - Week 39, 2023
This could be an especially worrying development for miners given that the bitcoin halving will take place sometime next year and will cut their rewards in half.
btc Price
bitcoin has shown some recovery over the past day as its price is now trading above the $26,800 level.
<img decoding="async" loading="lazy" class="alignnone size-medium aligncenter" src="https://technicalterrence.com/wp-content/uploads/2023/09/Problems-for-Bitcoin-miners-Hashprice-falls-to-all-time-lows" alt="bitcoin price chart” width=”1534″ height=”876″/>
btc has shot up over the last few hours | Source: BTCUSD on TradingView
Featured image by Orbital 101 Studio on Unsplash.com, TradingView.com charts, Glassnode.com
