Bitcoin miners are under increasing pressure to offload some of their BTC holdings as they grapple with soaring hash rates and persistently high energy costs. This trend has raised concerns about its potential impact on cryptocurrency prices.
Cryptocurrency analyst Miles Deutscher has highlighted a concerning supply challenge for Bitcoin. Rising miner selling pressure, driven by peak hash rates, increased network difficulty, and surging energy costs, is affecting mining profitability. The upcoming halving event, which cuts mining rewards in half, may cause miners to sell their holdings to bolster capital reserves.
Bitcoin miners consistently sold a significant portion of their mined Bitcoin on centralized exchanges. Despite a recent record of $128 million sent to exchanges, Bitcoin’s price didn’t react significantly. Miners typically did this to convert Bitcoin to cash for profit and expenses.
The total Bitcoin hash rate also reached an all-time high of 425 exahashes per second (EH/s), as reported by Blockchain. This metric has surged by a remarkable 68% since the beginning of the year.
Similarly, network difficulty has also reached an all-time high of 57T, marking a 63% increase year-to-date. These milestones reflect the increasingly competitive and resource-intensive nature of Bitcoin mining, resulting in a decline in overall profitability.
The hash price, measured in dollars per terahash per second per day, has plummeted to just $0.06, according to the Hashrate Index. This represents an 85% decrease in mining profitability since the peak of the bull market when it stood at $0.40 per terahash per second per day.
While Bitcoin’s price surge has provided some relief to struggling miners, it may not be enough to cover their financial needs. Glassnode warns that miners could face significant income challenges unless BTC prices rise substantially. This situation highlights the delicate balance between upholding the Bitcoin network’s security and addressing miners’ economic pressures. The outcome holds implications for the broader cryptocurrency landscape, making it a point of concern for industry insiders and investors alike.