As Bitcoin’s price climbs back above the 200-day simple moving average (SMA), the network hashrate has pulled back after revisiting the 700 EH/s mark. With mining difficulty hovering near all-time highs and hashprice remaining below $50/PH/day, miners have entered a new capitulation phase. Could the low circulating supply of BTC, driven by the ongoing exchange exodus, signal a more profitable period ahead? In this week’s mining economics rundown, we’ll cover the following topics:
Bitcoin Price Back Above the 200 SMA
Network Hashrate Revisits 700 EH/s
Start of a New Miner Capitulation Phase?
Difficulty Hovering Around ATHs
Hashprice Nearing $50/PH/day
Exchange Exodus
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BITMAIN Launches the ANTMINER S21+
Comparison of the Antminer S21 Series
Bitcoin Price Back Above the 200 SMA
Bitcoin made a significant leap at the start of the week, climbing from the $62,000 range to $66,000. It’s a solid move, but still shy of the critical $70,000 mark that bulls are waiting for to confirm a new high. With $BTC now breaking above $64,000 and surpassing its 200-day moving average, traders are closely watching this level, especially after previous fakeouts and failed breakouts. The big question is: will this be the real push toward $70,000?
Network Hashrate Revisits 700 EH/s
The network hashrate surged to 700 EH/s for the second time this year but soon experienced a sharp drop, falling 35 EH/s to 665 EH/s. The exact cause of this 5% pullback is unclear, though ongoing grid issues from recent hurricanes in the US may have contributed to curtailment across Bitcoin mining operations in the affected states.
Start of a New Miner Capitulation Phase?
The Bitcoin Hash Ribbon indicator aims to identify periods when Bitcoin miners are under stress and may be capitulating. Instead of pinpointing the exact price bottom, it highlights times when mining rigs are being turned off due to challenging market conditions, leading to drops in hashrate. When the 30-day moving average (30DMA) drops below the 60-day moving average (60DMA), it signals hashrate declines and miner capitulation, represented by dark pink vertical lines.
Following the halving earlier this year, there was a miner capitulation phase that lasted 77 days. Last week, the two averages crossed once again. Although the 30DMA crossed back above the 60DMA within three days, this brief capitulation is indicative of the prolonged tight margins we’ve seen in the mining industry.
Difficulty Hovering Around ATHs
On October 9th, there was a 4.12% upward difficulty adjustment, bringing the year-to-date increase to 27.8%. The current difficulty is just under 1% below the all-time high of 92.67T. As of the time of publishing, we are halfway through the current difficulty epoch, with an estimated downward adjustment of between -1.9% and -1.2% projected for October 23rd.
Hashprice Nearing $50/PH/day
After hitting a historic low of $38/PH/day, hashprice has begun to recover, currently standing at nearly $48/PH/day—an increase of 26% from its record low. While mining margins remain tight, this recovery offers some relief. Last year, hashprice spent most of its time above the $60/PH/day level. To reach that same level at the current difficulty, Bitcoin would need to rise to $83,000.
Exchange Exodus
Bitcoin investors are increasingly shifting away from centralized exchanges, leading to a significant decline in Bitcoin reserves on these platforms. Instead of storing their assets on exchanges, many are opting for self-custody solutions, giving them direct control over their Bitcoin. This growing trend is driven by concerns over security and a desire for greater ownership, which has reduced the liquidity of Bitcoin on centralized exchanges.
As of October 13, Bitcoin reserves on centralized exchanges reached an all-time low of 2.67 million BTC, compared to a high of 3.36 million in June 2022. Binance currently holds the largest share of reserves, with 563,000 BTC, followed by Kraken with 112,300 BTC.
The reduced supply of Bitcoin on exchanges contributes to a sense of scarcity. By holding their Bitcoin in self-custody, investors are effectively limiting the available supply for trading, potentially strengthening its value over time. If demand for Bitcoin picks up and the exchange reserves stay low, Bitcoin might increase in a faster pace than new ASIC hardware can be deployed. This potentially will improve the margins for miners.
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BITMAIN Launches the ANTMINER S21+
Comparison of the Antminer S21 Series
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