The Bitcoin Network Hashrate Surges to an All-Time High
September witnessed a significant milestone for Bitcoin [BTC] miners, with the network hashrate hitting an unprecedented peak, leading to financial strains. The network hashrate measures the computational power required for BTC mining operations. On September 1st, this metric reached a historical high of 742 EH.
Enhanced Security and Efficiency
The surging hashrate indicates a notable advancement in network security compared to previous periods. Nevertheless, the network difficulty, indicating the challenge faced by miners in discovering the next BTC block, lingered close to its peak at 90 trillion. As a consequence, miners found themselves in a scenario where increased computational power was increasingly necessary, consequently escalating the average production cost for mining a single BTC. This phenomenon particularly impacted smaller-scale miners, escalating the strain on their operations.
By September 3rd, the estimated total production cost for mining one BTC stood at $71.5K, while the average trading price for the asset on the same date was $57.4K. This represented a deficit of +$14K to mine one coin.
In the long term, BTC price tends to align with its production cost. However, the significant disparity observed at the start of September placed a considerable burden on miners’ profits. Daily miner revenues plummeted from over $36 million in late August to around $26 million in September.
Consequently, miners might be compelled to liquidate portions of their BTC reserves to offset burgeoning production expenses amidst declining revenues. Data from CryptoQuant revealed a reduction in Miner Reserve from 1.817 million BTC to 1.814 million coins within a few days, reflecting miners’ selling activity.
Throughout August, the Miner Reserve, signaling the accumulated BTC holdings by miners, exhibited an upward trajectory. This trend implied miners retained their mined BTC, suggesting a mildly optimistic outlook for BTC’s price trajectory.
Pressure on BTC Price
However, the trend reversed towards the conclusion of August, evidencing miners reducing their holdings. Subsequently, around 3000 BTC were sold off in September, likely to offset the mounting operational costs.
Currently valued at $57.9K, any sustained selling pressure from miners could further weigh on the BTC price. Hence, continuous monitoring of this aspect is essential alongside broader market updates to gauge potential impacts on BTC’s value.