Key Takeaways
How Do Network Conditions Affect Bitcoin Miners?
Record high mining problems, combined with a hash price at an all-time low, are putting pressure on the entire Bitcoin mining community.
How low is miner profitability currently?
Mining profitability has fallen to just USD 0.0334/day per 1 TH/s, the lowest level since 2023.
The longer the market remains in risk-off mode, the higher the capitulation tends to be. It’s been over six weeks since October’s crash led to a market-wide sell-off that wiped out $1 trillion in total crypto market capitalization.
Given this design, a peak in capitulation was inevitable. STH NUPL fell to extreme lows, ETFs continued to drain capital and LTHs sold off portions of their holdings. However, the market has still not managed to achieve a meaningful recovery.
In the charts Bitcoin [BTC] failed to convert $95,000 or $90,000 into support, making a bottom at $86,000 premature. The tricky part? The broader market weakness now appears to be weighing on BTC’s core fundamentals.
Record mining problems are accompanied by a historically low hash price
The mining community is a core pillar of Bitcoin’s foundations.
On November 3, mining problems reached a record high of 155 trillion, making it harder than ever to earn Bitcoin through mining.
While this strengthens the network, the hash price has simultaneously fallen to an all-time low.
According to the Hashprice Index, Bitcoin’s hash price fell to an all-time low of $34.49 per PH/s. This represents a drop of more than 50% in just a few weeks and marks the lowest level in BTC history.
Source: Hashprice index
To put it in perspective: a a miner with 1 PH/s mining power would earn $34.49 per day, excluding expenses. This directly impacts miners’ profitability, which is a key indicator of Bitcoin’s core principles.
Combine that with record high mining problems, and the network is becoming increasingly competitive for smaller miners. A higher difficulty means higher costs, while a low hash price means lower returns.
Given this context, is this still a bullish signal for network security?
Of BTC dropped approximately The question now is: can major miners maintain their positions under these conditions, or will declining profitability start to affect the Bitcoin network as a “whole”?
Mining profits at multi-year lows as BTC falls
Profitability is crucial for any miner to stay in the game.
After the halving, the block reward dropped to 3,125 BTC. Simply put, miners earn fewer coins per block, so they need higher BTC prices to stay profitable, especially since it’s record difficult to drive up costs.
At the same time, Bitcoin Mining profitability has dropped to 0.0334 USD/day per 1 TH/s. This means that a miner with 1 TH/s earns 3 cents per day. This is the lowest figure since 2023.
Source: Bitinfochart
Simply put, with the hash price falling, mining woes at record highs, and the BTC price falling, miners’ profitability has taken a hit, sending the metric to a multi-year low.
Meanwhile, the cost of mining has risen to $112,000.
Technically, that’s about 1.3x higher than Bitcoin’s current value.
As a result, the pressure is not just affecting smaller miners. Instead of, capitulation begins to affect the entire community.
If BTC falls even further, we could see large-scale miners leave, leaving the sector more vulnerable than ever.