Bitcoin Miners Navigate Challenges but Avoid Catastrophic Losses
The rising operational costs and lower rewards are impacting Bitcoin miners, but the situation isn’t dire, according to a cryptocurrency analyst.
Current Mining Landscape
James Check, lead analyst at Glassnode, stated that while Bitcoin miners are experiencing some difficulties, it’s not at a catastrophic level. In a June 21 video, Check noted that there is a period of hash ribbon inversion, where blocks are being processed about 14 seconds slower than they should be, indicating a reduction in hashrate. This suggests that about 5% of the mining hashrate is currently struggling.
Hash Ribbon Inversion
A hash ribbon inversion happens when the 30-day moving average of the hashrate falls below the 60-day moving average, signaling a period of increased mining difficulty. This can occur due to various factors, such as rising operational costs, a decline in Bitcoin’s price, or equipment issues among miners.
Impact of the Halving Event
Following the Bitcoin halving on April 20, the hashrate began to decline as mining firms turned off unprofitable rigs. The halving event, which occurs every four years, cut mining rewards in half from 6.25 BTC to 3.125 BTC. At the time of publication, the Bitcoin network’s hashrate is 586 exahashes per second (EH/s), down 2% over the past 30 days, according to Blockchain.com data.
Operational Strategies
Despite these challenges, Check suggested that miners are likely breaking even by selling their newly mined Bitcoins to cover operational costs. He remarked that miners might be treading water, selling as much Bitcoin as they mine to manage expenses.
Adapting to Changes
Panos, another analyst, highlighted that Bitcoin miners are selling most of their coins to pay the bills. Additionally, Check pointed out that transaction fees are becoming an increasingly significant part of miner revenues. This shift necessitates that miners adapt by innovating and applying efficient capital management strategies.
Strategic Holdings
Matthew Sigel, head of digital assets research at VanEck, observed that while nearly all Bitcoin miners are selling their coins, some, like CleanSpark (CLSK), are managing to hold their BTC and use their USD balance sheet to acquire new capacity. This approach indicates a strategic adaptation to the evolving mining landscape.
