The price of Bitcoin has been trading below $20,000 for quite some time now, and data from a popular cryptocurrency analysis resource reveals that it is getting dangerously close to the cost of producing BTC.
This could, according to Glassnode, cause “acute revenue stress in the mining industry”.
The price of Bitcoin close to the cost of production
The production cost of a BTC includes all the expenses that the miners have to make. These include but are not limited to electricity bills, rent, salaries, hardware and anything else that is applicable.
Popular cryptocurrency analysis resource Glassnode revealed that the current estimated cost of production (generalized) is around $18,300.
Bitcoin has been trading very close to its estimated cost of production price since the June selloff.
The difficulty regression model hovers around $18,300 and indicates a potential threshold for acute earnings stress in the mining industry.
In fact, the price of Bitcoin has been trading below $20,000 for the past week. At the time of writing, the cryptocurrency appears to be attempting a recovery above the critical level.
BTC Miners Unfazed
Despite the above and the general global malaise in times of geopolitical and economic uncertainty, Bitcoin’s hashrate has managed to mark another all-time high recently.
The current hashrate reaches 242 exahashes per second. According to a Glassnode analogy, “that’s the equivalent of all 7.753 billion people on earth, each completing a SHA-256 hash calculation roughly 30 billion times every second.”
Is the worst yet to come?
Glassnode suggests that Bitcoin tapes began to relax in late August, “providing an indication that mining conditions were improving and that the hashrate was back in line.”
Price could not be tracked, but the analytics company says that “almost all historical hash tape unwinds have preceded greener pastures in the following months.”
However, that doesn’t mean we’re out of the woods just yet, at least not immediately. A potential recovery is associated with an earlier capitulation, and Glassnode data shows that it may not have happened yet, at least compared to Mining Pulse’s performance in previous years.
The chart above measures the average block interval relative to the 600 second target. Lower values show that the blocks are faster than the target, suggesting that the hashrate is growing faster than the difficulty settings can keep up. On the other hand, higher values show the opposite and are usually a response to specific industry-related shocks, such as miner capitulation events.
That said, recent data indicates that there have been no dramatic events related to the mining pulse, unlike in previous years.
It remains to be seen whether this is more subdued, but the prolonged capitulation event is simply the appetizer, or whether it reflects a new dynamic as more of the power is held by better-cap publicly traded mining companies.
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