Bitcoin miners are facing increasing operational costs and reduced rewards, but according to a cryptocurrency analyst, the situation is not yet catastrophic. James Check, also known as “Checkmatey,” who is the lead analyst at Glassnode, stated in a video on June 21 that the network is currently experiencing a hash ribbon inversion, resulting in slower block discovery. He explained that about 5% of the mining hashrate is struggling at the moment, meaning that there is a decrease in processing and computing power being contributed to the network through mining.
Check emphasized that the 5% decline in hashrate is not significant, and suggested that Bitcoin miners are likely to be selling some of their holdings, but it does not appear to be a complete and total firesale. The hash ribbon inversion occurs when the 30-day moving average of the hashrate falls below the 60-day moving average, indicating a period of mining difficulty. This can be caused by various factors such as increased operational costs, a decline in Bitcoin’s price, or equipment issues among miners.
Following the Bitcoin halving on April 20, the hash rate began to decline as mining firms turned off unprofitable mining rigs. The halving event occurs every four years, reducing miners’ rewards by half. The April 20 halving decreased mining rewards from 6.25 BTC to 3.125 BTC.
At present, the Bitcoin network’s hashrate is at 586 exahashes per second (EH/s), which is a 2% decrease over the past 30 days, according to Blockchain.com data. Check suggested that while miners may be barely breaking even at the moment, they are likely selling most of their coins to cover operational costs.
According to other analysts, Bitcoin miners are selling a significant portion of their coins to pay the bills, and transaction fees are becoming a larger part of miner revenues. This has led to the industry needing to innovate and manage capital efficiently.
In conclusion, despite the challenges faced by Bitcoin miners, the situation is not yet dire, and miners are adapting by selling their coins to cover operating expenses. This shift in the revenue stream may lead to further innovation and efficient capital management in the industry.