The Bitcoin network has reached a new milestone in its computing power. Earlier this week, the network’s hashrate surged to a record 627 exahashes per second (EH/s). This marks a significant recovery from a dip of 8.5% in July. However, this increase in hashrate comes at a time when Bitcoin is struggling to stay above $58,000, currently trading 20% below its all-time high of $73,000.
Rising Bitcoin Hashrate Brings Challenges for Miners
As Bitcoin hashrate climbs, mining Bitcoin becomes more difficult and competitive. Miners now need more powerful computers and energy, making the process more costly. On the positive side, a higher Bitcoin hashrate also means that the Bitcoin network is more secure, as it becomes harder for anyone to tamper with the blockchain.
Despite the increase in hashrate, miners are seeing their earnings drop. The Bitcoin hashrate price, which measures how much miners earn for their computing power, has fallen to a record low of $0.038 per terahash per second (TH/s). This is a sharp decline from around $0.05 per TH/s right after the Bitcoin halving in April.
Miner Sell-Off and Declining Profit Margins
Last week, as Bitcoin briefly dropped to $49,500, miners began selling off their holdings. Miner outflows surged to 19,000 BTC on August 5, the highest level since March. This sell-off happened as miners saw their profit margins shrink to just 25%, the lowest since January. Some miners even sold at a loss due to the recent dip in Bitcoin’s value, with losses reaching $22 million on a single day, the largest since May 29.
Large Miners Continue Accumulating
While smaller miners are feeling the pressure, larger Bitcoin mining companies are continuing to accumulate more BTC. Their total holdings have now reached 66,000 BTC. On the other hand, smaller miners are struggling to stay profitable, with many selling their reserves as mining becomes less profitable.
Despite the challenges faced by miners, there may be a silver lining. History shows that miner sell-offs and higher outflows often occur near the bottom of Bitcoin prices during bull markets. This suggests that a Bitcoin rally could be on the horizon.
