Bitcoin miners are facing challenges as operational costs rise and rewards decrease, but the situation is not dire, according to a cryptocurrency analyst.
Glassnode lead analyst James Check, also known as “Checkmatey,” discussed the current state of Bitcoin mining in a video on June 21. He explained that there is a hash ribbon inversion happening, resulting in blocks being found slightly slower than usual. This indicates that there is less computing power online, causing a 5% struggle in mining hashrate.
Despite this, Check emphasized that the 5% decrease is not significant and suggested that miners may be selling some of their holdings to cover costs, rather than engaging in a massive sell-off.
A hash ribbon inversion occurs when the 30-day moving average of hashrate falls below the 60-day moving average, signaling a period of mining difficulty. This can be due to various factors such as increased costs, declining Bitcoin prices, or equipment issues.
After the Bitcoin halving on April 20, the hashrate began to decline as mining firms shut down unprofitable rigs. The halving event occurs every four years, reducing miners’ rewards by half. Following the April 20 halving, rewards decreased to 3.125 BTC from 6.25 BTC.
Currently, the Bitcoin network’s hashrate is 586 exahashes per second (EH/s), down 2% over the past 30 days, according to Blockchain.com data. Check suggested that miners may be barely breaking even as they mine new Bitcoins to cover costs.
Some analysts have noted that miners are selling most of their coins to pay bills, with transaction fees becoming a significant part of their revenue. This trend is forcing miners to innovate and manage their capital efficiently.
Despite these challenges, there is optimism that Bitcoin miners can adapt and thrive in the evolving landscape of cryptocurrency mining.