The world’s largest cryptocurrency Bitcoin (BTC) has been trading in a pretty tight range recently close to $19,200 level. On one hand, the Bitcoin hashrate continues to grow fast, which means that Bitcoin miners have to put more computational power to add new blocks to the Bitcoin blockchain.
As energy costs rise at the same speed, Bitcoin miners have been getting paper-thin margins on their mining revenue. This could probably lead to another major sell-off by Bitcoin miners as we saw earlier this year. As on-chain data provider Glassnode explains:
The #Bitcoin Hash Price has reached an all-time-low of $66,500 per Exahash. This means that $BTC miners are earning the smallest reward relative to hashpower applied in history, and likely puts the industry under extreme income stress.
Earlier this month, Arcane Research published a report stating that the miner revenues have dropped by 81% from their peak in October 2021. Also, a large majority of miners saw their gross margins drop to 30%-40% from 80%-90% area. The Arcane Research report notes:
“Unfortunately, most miners today are, to a varying degree, exposed to rising power prices. The mining industry has already become almost eradicated in Europe due to the energy crisis, but American miners also feel the heat.
Power prices in the US, where a significant portion of the industrial-scale miners are located, have increased considerably and will likely keep rising as natural gas prices go up.”
Bitcoin Miners vs Long Term Holders
While the Bitcoin hash price is making new lows, Bitcoin long-term holders on the other hand have been showing great conviction. Citing data from Glassnode, crypto analyst Will Clemente explains:
“A new all-time high 78% of Bitcoin supply has not moved in at least 6 months. Pretty remarkable in the face of the worst macroeconomic backdrop in recent history, geopolitical uncertainty, and WW3 fears. There is a group of seriously convicted HODLers out there”.
Bloomberg analyst Mike McGlone recently said that Bitcoin is entering an “unstoppable maturation stage“. He believes that the BTC price will continue to rise despite the Fed rate hikes ahead this year.
It will be interesting to see that if the Bitcoin miners trigger a selling going ahead, will the long-term holders continue to show the same level of conviction? As of press time, Bitcoin (BTC) is trading at $19,340 with a market cap of $372 billion.