Bitcoin miners are feeling the pressure of rising operational costs and diminishing rewards, but according to a cryptocurrency analyst, the situation is not yet catastrophic.
In a recent video, Glassnode lead analyst James Check, also known as “Checkmatey,” discussed the current state of Bitcoin mining. He mentioned that a hash ribbon inversion is taking place, leading to blocks being mined slower than usual due to a decrease in hashrate. Check explained that around 5% of mining hashrate is currently struggling.
Despite the challenges, Check emphasized that the 5% decrease in hashrate is not significant, and it is likely that miners are selling some of their holdings to offset costs. He reassured that this does not indicate a complete collapse in the mining industry.
A hash ribbon inversion occurs when the 30-day moving average of hashrate falls below the 60-day moving average, signaling a period of mining difficulty. Reasons for this could include higher operational expenses, a drop in Bitcoin’s price, or technical issues faced by miners.
Since the Bitcoin halving in April, the network’s hashrate has been declining as miners shut down unprofitable rigs. The halving event occurs every four years, reducing miners’ rewards by half. Following the most recent halving, mining rewards decreased from 6.25 BTC to 3.125 BTC.
Currently, the Bitcoin network’s hashrate stands at 586 exahashes per second (EH/s), down 2% over the past month according to Blockchain.com data. Check suggested that while miners may not be making substantial profits, they are likely breaking even by selling newly mined Bitcoins to cover expenses.
In light of these challenges, miners are increasingly relying on transaction fees as a significant source of revenue. This shift is pushing the industry to innovate and manage capital more efficiently. Despite the difficulties, some miners like CLSK are managing to hold onto their BTC and expand their operations using their USD balance sheet.
Overall, while Bitcoin miners are facing tough times, they are adapting to the changing landscape and finding ways to sustain their operations in the long run.