Key Takeaways
- On October 3rd, 2022, the Bitcoin hash rate reached a record-breaking high above 245 EH/s.
- However, simultaneously, BTC miner profitability is a few inches away from the lowest levels ever recorded.
On October 3rd, 2022, the Bitcoin hash rate reached a record-breaking high above 245 EH/s. However, simultaneously, BTC miner profitability is a few inches away from the lowest levels ever recorded. With the approximate network wide price of production at $12,140 and the prices below the $20,000 range, glassnode evaluation hints that miners are currently stuck in the folds of intense income difficulty.
Read: Cardano Founder Says 2 Million Units of Bitcoin Are Lost Forever
Bitcoin miner profitability under threat as hash rate hits new all-time high
The mere truth is that the measurement of how 'difficult" it is to mine a block is a constituent of deciding the production charges of mining Bitcoin. With every increase in difficulty, there an extra computing power needed to mine a new block. Employing a difficulty regression analysis, data reveals a R2 coefficient of 0.944 and the previous time the analysis flickered signs of miner difficulty happened when BTC's nosedived to $17,840. As we speak, it is close to hitting $18,300 which is not so far from the price range witnessed over the last few weeks.
The hash rate reaching a new record effectively means that miner margins will be further squeezed. Unprofitable operations will have to choose between mining at a loss in the hopes that Bitcoin's future price will eventually make up the cost difference or cutting the cord and waiting until the difficulty decreases or energy costs decrease. The difficulty is projected to increase in the coming week due to the recent increase in hash rate; estimates place this increase at 6% to 10%.
Bitcoin ASIC profitability. Source: DxPool
The profitability metrics above clearly demonstrate the tightrope some miners are currently trying to walk by, relying on a miner's investment costs and operational costs. Let us know what your thoughts are in the comment section below.
