The profitability of the miner could be harmed by the increase in the cost of mining blocks. Given that the price of Bitcoin has been falling throughout the year, from $46,000 to approximately $19,300, analysts estimated that the increase in difficulty would reduce miners’ profits by approximately 20%.
Leading analytics firm Glassnode issues a dire warning about a particular group of Bitcoin owners who collectively hold nearly $1.5 billion worth of BTC.
According to Glassnode, the Bitcoin hash rate, which measures the processing power of the network, is at an all-time high.
While an increase in network hash power puts BTC miners in a vulnerable financial position, a higher hash rate suggests a more resilient network that is more secure against an attacker.
“Bitcoin Difficulty has adjusted to a new all-time high due to a rapid increase in network hashing power. This increases the cost of BTC production and puts additional pressure on miners.”
The analytics company estimates that it will now cost $19,300 to make a Bitcoin through mining, which is more than the coin’s current value of $19,067. According to Glassnode, the combination of rising production costs and the low price of BTC indicates that miners face a significant danger of capitulation.
Difficulty Ribbon Compression is an on-chain indicator that employs simple moving averages of Bitcoin’s network difficulty to assess the impact of miner selling pressure on the price of the king cryptocurrency. Puell Multiple is a statistic that examines the earnings of BTC miners.
Glassnode further emphasizes that BTC miners have been actively selling their shares in recent months.
Bitcoin miners now have approximately 78,200 Bitcoins ($1.49 billion) in their treasuries, and this number has generally increased since mid-2019.
The slowdown in the growth of the mining treasury in recent months has been the most dramatic in the last three years.
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