Bitcoin miners are experiencing an increase in profitability and a recovery of their hashrate following the recent rally in the price of Bitcoin. As reported by CryptoQuant, the Bitcoin network’s hashrate has rebounded, with only a 3% drawdown from its all-time high compared to 8% in early July. This increase in hashrate is often associated with a sustained rally in Bitcoin’s price, indicating a positive trend for miners.
The rise in profitability for miners has led to a decrease in selling pressure from this cohort of market participants. With miners now being paid more than they have been since the Bitcoin halving in April, they are less likely to offload their holdings to cover operational costs. This is reflected in the Miner Profit/Loss Sustainability metric, which shows the growth of miner revenues outpacing the growth of mining difficulty.
Bitcoin’s latest rally has resulted in daily miner revenues increasing by approximately 50%. From a year-to-date low of $22 million earlier this month, total daily miner revenues now stand at around $32 million. This surge in revenues has also contributed to the recovery of Bitcoin’s hashrate, as miners have less incentive to sell their holdings with the increase in profitability.
There has been a noticeable shift in the balances of larger and smaller Bitcoin mining entities. Larger miners have been increasing their holdings, with the total balance of large miners rising from 61,000 BTC to 65,000 BTC since the beginning of the year. On the other hand, smaller miners have been selling off their holdings, with their balance decreasing from 59,000 BTC to 51,000 BTC over the same period.
Despite the positive trend in profitability and selling pressure, miners face the risk of remaining at “depressed levels” with regard to fees. This is because their profitability is heavily dependent on Bitcoin’s price, which can be volatile. CryptoQuant has warned that miners should be cautious of this risk, as over-reliance on Bitcoin’s price for profitability could lead to challenges in the future.
The recent increase in profitability and decrease in selling pressure among Bitcoin miners is a positive development for the cryptocurrency. However, miners should remain vigilant of the risks associated with fee dependency and fluctuations in Bitcoin’s price to ensure their long-term sustainability.
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