The Bitcoin hash rate hit a new all-time high above 245 EH/s on Oct. 3, but at the same time, BTC miner profitability is near the lowest levels on record.
With prices in the low $20,000 range and the estimated network-wide cost of production at $12,140, Glassnode analysis suggests “that miners are somewhat on the cusp of acute income distress.”
Generally, difficulty, a measure of how “difficult” it is to mine a block, is a component of determining the production cost of mining Bitcoin. Higher difficulty means additional computing power is required to mine a new block.
Utilizing a Difficulty Regression Model, the data shows an R2 coefficient of 0.944 and the last time the model flashed signs of the miners’ distress was during BTC’s flush out to $17,840. Currently, it hovers near $18,300, which is not far from the price range seen in the past two weeks.
The hash rate hitting a new all-time high effectively means that miner margins will be further squeezed and outfits that are unprofitable can either mine at a loss, assuming that BTC’s future price will eventually make up for the cost difference, or they can unplug and wait until either the difficulty drops or energy costs improve.
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