Bitcoin’s price has rebounded following a significant rate cut, while the network hashrate experienced its second-largest drop of the year, partially influenced by the rise of Fractal Bitcoin. The hashrate declines prompts a downwards difficulty adjustment, hashprice shows signs of recovery from record lows, but the ASIC markets remain depressed. At times of historic low margins, mining companies are adapting their strategies, with some, like Cathedra, following MicroStrategy’s playbook by purchasing Bitcoin directly. In this week’s mining economics rundown, we’ll cover the following topics:
Bitcoin Price Rises Following Rate Cut
Second Largest Network Hashrate Drop of the Year
Fractal Bitcoin Contributing to Network Hashrate Decline
Expected Difficulty Adjustment Follows Hashrate Decline
Hashprice Recovers From Record Lows
ASIC Markets Remain Depressed
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Adapt or Die: Another Miner Adopts MicroStrategy’s Playbook
Hut 8 and Bitmain Launch HPC Data Center-Compatible Miner
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Bitcoin Price Rises Following Rate Cut
Last Wednesday, the Federal Reserve implemented a 50 basis point rate cut—the first reduction since March 2020, when markets panicked due to the Covid-19 pandemic. This move could potentially benefit assets like Bitcoin, as investors may shift towards higher-risk investments in search of better returns, rather than holding traditional interest-bearing assets or savings. Since the rate cut, Bitcoin has surged approximately 10%. However, its price has been fluctuating in recent days, struggling to reclaim its 200-day moving average. Over the past five days, each attempt to break above this level has met resistance.
Second Largest Network Hashrate Drop of the Year
After surging to new all-time highs by shortly surpassing 700 EH/s earlier this month, the Bitcoin network hashrate experienced a sharp decline, dropping to 615 EH/s. This represents a decrease of 85 EH/s, or 12%, in just over a week—marking the second-largest decline within such a short time span. Over the past week, the hashrate has slowly recovered and is currently sitting at 642 EH/s.
Fractal Bitcoin Contributing to Network Hashrate Decline
In September, the Fractal Bitcoin team introduced a merge-mining method called Cadence Mining. With this approach, miners produce one out of every three blocks by merge mining Fractal with pools like AntPool, F2Pool, and Spider Pool. However, the remaining blocks are mined by miners exclusively focused on mining Fractal Bitcoin ($FB) through a process known as Permissionless Mining.
Shortly after the launch of the $FB token, its price surged to $38. This led to miners dedicating more hashrate to permissionless mining, causing Fractal Bitcoin’s hashrate to spike by over 36 EH/s. Charlie Spears of Blockspace Media suggested that this surge in permissionless mining may have contributed to the recent decline in Bitcoin’s network hashrate. This theory seems plausible, as the rise in permissionless mining coincided with a local bottom in Bitcoin’s network hashrate.
Expected Difficulty Adjustment Follows Hashrate Decline
As hashrate cools down, block times have lengthened, prompting an estimated -5% difficulty adjustment scheduled for Wednesday, September 25th. With network difficulty currently at all-time highs, this anticipated downward adjustment will be a welcome change for miners.
Hashprice Recovers From Record Lows
After hitting a historic low of $38/PH/day, hashprice has begun to recover. In technical analysis, a double bottom is a bullish reversal pattern, and there is hope that hashprice will follow a similar trend after testing $38/PH/day twice. Currently, hashprice stands at $43/PH/day, up 13% from its record low. While mining margins remain tight, the recovery offers some relief.
ASIC Markets Remain Depressed
Aside from the recently launched Antminer S21 XP, most air-cooled, latest-generation miners (1X J/TH) are being sold for under $20/TH by ASIC hardware resellers. Meanwhile, older machines from the 25 to 38 J/TH generation have been consistently selling around $6/TH for several months.
Bitdeer Announces Auction for 2,880 Used Antminer S19s
Last week, major mining firm Bitdeer Technologies announced an auction for 2,880 used Antminer S19 devices (90T and 95T models). This auction is part of Bitdeer’s ongoing efforts to upgrade its mining fleet following the Bitcoin halving. The batch includes 2,132 units of the Antminer S19 (95T) and 748 units of the Antminer S19 (90T), with a combined hashrate of approximately 270 PH/s. The starting bid is set at $270,000, implying a price of just $1/TH. By comparison, at the peak of the bull market three years ago, ASIC hardware sold for over $100/TH. This auction highlights the depressed state of the ASIC market, as low hashprice post-halving has resulted in a significant surplus of >30 J/TH generation machines.
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Adapt or Die, Another Miner Adopts MicroStrategy’s Playbook
Hut 8 and Bitmain Launch HPC Data Center Compatible ASIC Bitcoin Miner
