The price of Bitcoin has taken a significant hit in the past month. The leading cryptocurrency by market cap is down more than 11% from its July price and has since lost more than $50 billion in market cap.
While the price drop has been painful for investors, Bitcoin miners have also felt the pain as mining revenue per compute has declined in recent months. On the other hand, Bitcoin hashrate has risen to high levels as mining companies continue to come online.
Bitcoin hashrate hits all-time highs despite the bear market
Over the past year, Bitcoin’s hashrate (the total combined computing power of miners) has nearly doubled. Facts from Blockchain.com shows that the Bitcoin network hash rate surpassed 414 terahashes per second (TH/s) for the first time on August 16.
This metric has since rebounded at 390 TH/s, but is expected to rise further in the coming weeks as miners deploy more computing power to break even their mining operations. The higher the hashrate, the more difficult it becomes to mine BTC and earn rewards. This means that miners are now earning less BTC per terahash of computing power than ever before.
Data from the Hashrate index shows this figure now stands at $0.06016 per terahash/second per day. For comparison, this figure stood at $0.08124 on May 8 during the rise of Bitcoin Ordinals and Inscriptions. A further decline from now would see mining revenue fall below the November 2022 low.
How miners adapt to stay profitable
The Bitcoin mining industry has proven itself resilient even through the depths of the crypto winter. According to facts According to investment information platform MacroMicro, the current average cost to mine a BTC is $45,877, while the current price of BTC is now $25,936.
BTC price displays volatility during the weekend | Source: BTCUSD on Tradingview.com
To stay profitable with the rising hash rate, Bitcoin miners have had to adjust their operations. Listed mining companies love it Marathon digital and Riot Platforms have raised about $440 million through share sales.
Bitcoin miners have also avoided selling their $900 million BTC as it could cause a major sell-off among investors. While previous on-chain data have shown that miners send a significant amount of coins to exchanges, and miners have done so expanded their reserves recently.
BTC Mining Outlook
The outlook for the Bitcoin mining economy in the coming months is uncertain but potentially promising if the hashrate continues to rise. Bitcoin’s next halving is expected to occur in April 2024, reducing the block reward by 50%.
When the halving happens, things could get even tighter for miners as they have to increase my blocks to break even. Nevertheless, major BTC mining companies are already on course for this adjustment. For example, Marathon Digital erases a 54% boost in its hashrate during the second quarter only reported a net loss of $21.3 million.
Featured image from iStock, chart from Tradingview.com