The Bitcoin mining industry has faced significant challenges in recent months. As the market continues to navigate these turbulent waters, miners are experiencing unprecedented pressures on profitability. From record-breaking hashrate levels to historic lows in hashprice, the current state of Bitcoin mining underscores the delicate balance between operational costs and market conditions. In the following analysis, we look into the key factors impacting the industry, including network hashrate, difficulty adjustments, and the current hashprice trajectory in comparison to the period after the 2020 halving.
Bitcoin Flash Crash
Be Greedy When Others are Fearful
Network Hashrate Cooling Off Slightly
Will Difficulty Reach 100T by EOY?
Hashprice Compared to Post 2020 Halving
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Comparative Profitability Analysis of Popular Bitmain Hardware: S21, S19XP, & S19j Pro
At a hashcost of $0.06 kWh
At a hashcost of $0.07 kWh
At a hashcost of$0.08 kWh
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Bitcoin Flash Crash
Last week, BTC dipped just below $50,000. This 30% drop over 7 days marked the largest correction since the bear market bottom at the end of 2022. The price then managed an impressive recovery, bouncing back 26% to nearly $63,000. However, despite this strong rebound, Bitcoin faced resistance at the 200 Simple Moving Average (orange line).
There’s still some work to be done before we can confidently turn bullish again. The first key hurdle is reclaiming the 200 SMA and turning it into support. After that, we need to push back to the top of the range where the price has spent most of this year. For now, it’s crucial that BTC avoids marking a lower low than last week’s.
Be Greedy When Others are Fearful
The Bitcoin Fear & Greed Index, which reflects the market’s emotional and sentiment-driven behavior, recently dropped to its lowest point since July 2022, reaching a value of 17, indicating “extreme fear.” This level of fear suggests that investors are deeply concerned about the market’s direction, with many questioning whether the downturn will persist. Historically, such intense fear has often been a signal that it might be an opportune moment to consider accumulating assets rather than selling.
Network Hashrate Cooling Off Slightly
After setting a record high of 671 EH/s at the end of July, network hashrate has cooled off again. Currently, hashrate stands at 621 EH/s, a level first reached in early March of this year. This represents a 50 EH/s (7.5%) retracement. With summer coming to an end in the Northern Hemisphere and 1X J/TH machines being deployed by big miners, it’s only the extremely low margins that are holding the network hashrate back from reaching the next big level of 700 EH/s.
Big headline last week was that Russia officially legalized Bitcoin mining, marking a significant shift in its approach to digital assets. President Vladimir Putin signed a landmark law on August 8, 2024, that establishes a comprehensive legal framework for Bitcoin mining, signalling Russia’s entry into the global digital economy. This move comes as Russia seeks alternative economic avenues amid Western sanctions. Russia has one of the leading energy sectors worldwide, producing some of the largest volumes of oil, gas, and electricity. This potentially positions the country as a major player in the global hashrate production.
Will Difficulty Reach 100T by EOY?
Following a surge in network hashrate at the end of July, difficulty was adjusted by 10.5% on the 31st. This marked the first double-digit increase since January 2023. Currently, the difficulty stands at 90.67T. We started the year at 72.01T, representing a 25.9% increase year-to-date. If difficulty continues to rise at this pace, it will likely cross the 100T mark by the end of this year. Next difficulty adjustment is projected for August 14th and estimated to be around -4.5%.
Hashprice Compared to Post 2020 Halving
The flash crash at the beginning of August caused hashprice to plummet to a new historic low of $38/PH/Day, which was 13.6% below the previous all-time low of $44/PH/Day, marked on the 3rd of July. While hashprice has recovered back above the $40/PH/Day mark, mining margins remain very thin.
As long as Bitcoin’s price does not improve and we see no spikes in transaction fees, many miners will continue to struggle. If current margins follow a similar trajectory to the hashprice after the 2020 halving, we might need to wait another 4 months before reaching pre-halving hashprice levels. Following the 2020 halving, hashprice dropped from around $145/PH/Day to a low of $70/PH/Day, a 51.7% decline. This time, it has fallen from $105/PH/Day (ignoring the spike during the halving) to a low of $38/PH/Day, representing a 63.8% decline.
And now we move on to the next content for our Premium Members:
Comparative Profitability Analysis of Popular Bitmain Hardware: S21, S19XP, & S19j Pro
At a hashcost of $0.06 kWh
At a hashcost of $0.07 kWh
At a hashcost of$0.08 kWh
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