Bitcoin Miners Maintain Operations Amid Rising Costs, Says Analyst
Bitcoin miners are experiencing increased operational costs and reduced rewards, but the situation has not reached catastrophic levels, according to a cryptocurrency analyst.
Operational Struggles for Bitcoin Miners
James Check, the lead analyst at Glassnode, noted that Bitcoin miners are currently in a period of hash ribbon inversion, resulting in blocks being processed about 14 seconds slower than usual. This indicates a reduction in hashrate, the processing power dedicated to mining on the Bitcoin network.
Check explained that approximately 5% of the mining hashrate is currently struggling. While this suggests that some miners might be distributing their holdings, it does not point to a widespread sell-off.
Source: Checkonchain/YouTube
Hash Ribbon Inversion and Its Implications
A hash ribbon inversion occurs when the 30-day moving average of the hashrate falls below the 60-day moving average, signaling increased mining difficulty. This can result from higher operational costs, a decline in Bitcoin’s price, or equipment issues among miners.
Impact of Bitcoin Halving
The recent Bitcoin halving on April 20 led to a decline in the network’s hashrate as mining firms turned off unprofitable rigs. The halving event, which occurs every four years, reduced mining rewards from 6.25 BTC to 3.125 BTC.
Source: Blockchain.com
Current Hashrate and Miner Behavior
As of now, the Bitcoin network’s hashrate stands at 586 exahashes per second (EH/s), a 2% decline over the past 30 days. Check suggested that miners are likely just breaking even, mining enough Bitcoin to cover their operational costs without resorting to significant asset liquidation.
Revenue and Adaptation
Check highlighted that transaction fees are becoming a larger portion of miner revenues. Miners must adapt to this shift, which may lead to more innovation and efficient capital management within the industry.
Industry Insights
Other analysts have echoed similar sentiments. Panos commented that Bitcoin miners are selling most of their coins to cover expenses. Matthew Sigel, head of digital assets research at VanEck, noted that while nearly all Bitcoin miners are selling their coins, some, like CleanSpark (CLSK), are managing to hold onto their BTC and use their USD balance sheets to acquire new capacity.
In summary, Bitcoin miners are facing challenges but are managing to maintain operations without widespread liquidation. The industry is expected to adapt and innovate to sustain operations in the changing economic landscape.
