Bitcoin hash price, a crucial metric reflecting miner revenue per terahash, has approached historic lows. According to Luxor Technology’s Hashrate Index, Bitcoin hash price plummeted by approximately 52% to $0.0459 per terahash second on June 24, down from its recent peak of $0.095 on June 8. Despite nearly hitting a record low of $0.0447 on May 1, there has been a slight recovery to $0.0479. In comparison, Ethereum (ETH) has also seen fluctuations in its mining profitability, though its network dynamics differ significantly from Bitcoin (BTC).
Industry Reactions to Bitcoin Hash Price
On June 23, Adam Ortolf from Upstream Data described the current situation for Bitcoin miners as a “survival game,” in the crypto update, Ortolf highlighted the significant drop in hash power, placing miners under considerable financial strain with the hash price hovering around $0.05 TH/s. In South Korea, a major hub for cryptocurrency activity, miners are also feeling the pressure of the declining Bitcoin hash price, with many small operations struggling to stay afloat.
Mitchell Askew, head analyst at Blockware Solutions, noted that while most Bitcoin (BTC) mining machines remain profitable, they face mounting pressure.
Factors Influencing Bitcoin’s Hash Price
Bitcoin Price Decline
In the past week of cryptocurrency updates, Bitcoin’s price has decreased by 6.8%, settling at $60,590. This decline follows negative market sentiment triggered by Mt. Gox’s plan to sell $8.6 billion worth of Bitcoin to creditors and recent outflows from US-based Bitcoin exchange-traded funds. The price of Bitcoin is a major factor in determining the hash price, as a lower Bitcoin price translates to lower revenue for miners. The news of Mt. Gox’s plan to sell a large amount of Bitcoin has likely contributed to the negative sentiment and subsequent price decline.
Advertisement Banner
Reduced Miner Rewards
The fourth Bitcoin halving event in April 2020 slashed the block subsidy from 6.25 BTC to 3.125 BTC, now valued at approximately $188,800. This reduction directly impacts miner revenue. Halving events are designed to reduce the rate at which new Bitcoins are created, thereby controlling inflation. However, each halving also cuts the rewards for miners, which can significantly impact their revenue and profitability. The most recent halving has reduced the block reward to 3.125 BTC, putting additional financial pressure on miners.
Bitcoin’s network mining difficulty, an indicator of mining block complexity, dropped by 5% to 83.68 trillion hashes after peaking on April 25. Mining difficulty adjusts approximately every two weeks to ensure that blocks are mined at a consistent rate of about one every ten minutes. When the difficulty increases, it becomes harder and more resource-intensive to mine new blocks, which can reduce profitability for miners. Miner Sell-Off and Reserves
Amid these challenging crypto updates, Bitcoin miners have significantly reduced their reserves. As of June 19, miner reserves dropped to 1.90 million Bitcoin, marking the lowest level in over 14 years. This sell-off shows miners’ financial pressures amidst a low hash price environment. When miners sell their Bitcoin holdings, it can indicate that they need to liquidate assets to cover operational costs. The reduction in miner reserves to 1.90 million Bitcoin highlights the extent of the financial strain on the industry. Similarly, Ethereum miners have also been selling off their ETH holdings, reflecting similar pressures in the broader cryptocurrency market.
Wider Implications of the Bitcoin Hash Price
The recent update regarding Bitcoin hash price highlights the complex interplay of factors that influence the profitability and sustainability of mining operations. As Bitcoin hash price remains a critical measure for the industry, miners and investors alike must navigate these challenges to ensure the long-term viability of their operations and investments. The ongoing developments in Bitcoin’s price, miner rewards, and mining difficulty will continue to shape the cryptocurrency market landscape and influence the fortunes of those involved in Bitcoin mining.
