Bitcoin miners are under pressure as their Bitcoin mining earnings plummet and mining machines’ running costs skyrocket. Fewer miners have been selling their Bitcoins to break even compared to the first quarter of 2024 (pre-halving event in April). It’s unlikely to see a Bitcoin panic dump soon.
While Bitcoin miners are feeling the squeeze from the rising cost of operations, analysts do not consider the hash ribbon inversion situation catastrophic enough to warrant a complete firesale
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The hash rate decline started in April following the Bitcoin halving event. A hash rate rebound is always expected when small-scale miners turn off their Bitcoin mining machines. Some large Bitcoin mining companies have been forced to shut down a few of their unprofitable mining rigs, resulting in the same hash rate improvement.
Struggling hash rate and rising costs press Bitcoin miners
According to an X post by TOBTC, Bitcoin miners are facing challenges with rising operational costs and decreased rewards. The rising operational costs have led to a slight reduction in the hash rate.
TOBTC further explained that while this may seem problematic, analysts suggest they are not yet experiencing significant capitulation or a complete sell-off of holdings. They pointed out that miners are maintaining a cautious stance amidst current conditions.
In this YouTube video, cryptocurrency market analyst James Check also agrees that about 5% of the mining hash rate is struggling. He also mentions that it isn’t enormous enough to result in a firesale.
Check expressed his opinion as a crypto industry professional that “miners might be treading water up here, they may not be full-scale bear market level capitulating, probably just treading water, they mine ten bitcoin, they sell ten bitcoin.”
Bitcoin miners fend off firesale despite halving tussle
Arthur Hayes, Maelstrom founder and BitMex co-founder, observed that while the Bitcoin halving event in 2024 came at a time when the liquidity of the U.S. dollar was “tighter than usual,” he expected the effects to be short-lived. “The narrative of the halving being positive for crypto prices is well entrenched,” he said.
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Some miners also expected an increase in Bitcoin price after the halving as witnessed in the past. Bakhrom Saydulloev mentioned that miners are yet to experience the full effect of this year’s halving since past halvings occurred during much better investment and economic climates. “The current crypto market conditions are not optimal; thus, the price trajectory remains uncertain. These factors indicate a need for caution in today’s market environment,” he advised.
Cryptopolitan reporting by Collins J. Okoth
