The Bitcoin network’s hashrate, a measure of the computational power to mine and process bitcoin transactions on the network, recently increased to a new record high of 627 exahashes per second (EH/s).
The increase comes despite a recent drop in bitcoin prices and record low hash price – or the average revenue per amount of mining power – indicating positive sentiment among miners after a bout of selling in the past few months.
A higher hashrate indicates a more secure network as more miners are competing to validate transactions, consequently profitability declines.
“Miners sold some Bitcoin as their average operating profit margins were squeezed to 25%, the lowest since January 22,” CryptoQuant said.
“We may have seen a miner capitulation event last week as miner outflows spiked after prices touched $49,000,” CryptoQuant added.
“Bitcoin daily miner outflows spiked to 19K BTC on August 5 [2024], the highest level since March 18 [2024].”
According to CryptoQuant, a miner capitulation event is typically seen near local bottoms for Bitcoin prices during bull markets. Since 2023, a spike in miner outflows coincided with local bottoms in March 2023 after the Silicon Valley bank sell-off – and January 2024, the price correction following the bitcoin spot ETF launch in the U.S.
It’s been difficult for miners over the last few weeks as Bitcoin dipped below $50,000 for the first time since February 2024.
MILESTONE | Crypto #ETFs Record Nearly $6 Billion in Trading Volume on Day of Market Rout [August 5 2024]
This is the first time spot Bitcoin ETFs in the U.S. have registered over $5 billion since mid-April 2024.
Spot Bitcoin ETFs registered a total daily volume of $5.74… pic.twitter.com/nH6DDYGFON
— BitKE (@BitcoinKE) August 6, 2024
According to an analysis by JP Morgan bank, mining profitability fell to all-time lows as the network hashrate rose in the first two weeks of August 2024.
The total market cap of the fourteen U.S. listed miners the bank tracks fell 18% since the end of July 2024, and ‘currently trade 2X their proportional share of the four-year block reward,’ analysts Reginald Smith and Charles Pearce wrote.
The hashprice, a measure of mining profitability, is still around 30% lower than the levels seen in December 2022 and about 40% below pre-halving levels, and this could slow hashrate growth in the near term, the report added.
The bank noted that the bitcoin price has dropped about 5% since the halving, but is still up 35% year-to-date and 104% year-on-year.
Early in July 2024, only five mining rigs were profitable for their operators as bitcoin (BTC) slumped to the $54,000 mark, according to F2pool which regularly analyzes mining profitability at given prices.
⛏️With #Bitcoin trading below $58k, what is the current profitability for mining?
At a rate of $0.08/kWh, ASICs less efficient than 23 W/T operate at a loss.
For more details on mainstream miners, please refer to the table below. pic.twitter.com/hJS1lsVnmK
— f2pool 🐟 (@f2pool_official) July 4, 2024
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