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Top Crypto News Today: Bitcoin Mining Power Surged By 70% in 2022, While Miners Continue to Remain Capitulated

Top Crypto News

The markets are currently undergoing hardships ever since the global financial systems have been under a toss. The constant rise in inflation following a drastic plunge in the country’s economy is leading to a drop in the strength of its fiat currency. In times when the broader markets have been enduring tougher times, Bitcoin is manifesting its robustness as the miners continue to mount faith over the upcoming BTC price rally. 123

Bitcoin price in recent times have displayed a sense of stability, preventing extreme volatility. Despite the prolonged-narrow consolidation & global macro turmoil, Bitcoin mining power, measured by the hash rate, has surged to new highs. 

 The BTC hash rate had previously reached the highs in May, which was followed by a steep drop to the lows below 190THs. However, since then the stress developed in the Bitcoin Mining sector which propelled the hash rate towards new highs of 282.16 THs a couple of days before. 

Top Crypto News

Source: blockchain.com

While the miners have intensified their activity, will the current BTC price remit the cost of production of a single Bitcoin? Are the miners accomplishing their task in loss, being in the capitulation phase? Let’s dive deep into it. 

Additional Read: Bitcoin Price Prediction

The Competition Within the Bitcoin Miners Reaches the Skies

It is a known fact that the Bitcoin mining process consumes more power than Ethereum, which worked on the same consensus mechanism and shifted to Proof-of-Stake recently. However, the arrival of new miners increased the competition, which further raised the difficulty and also the Bitcoin mining cost. The Bitcoin mining difficulty has undergone a series of upward adjustments which has risen by more than 27% since the Great Miner Migration peak of May 2021. 

Source: Glassnode

The higher the difficulty indicates an increase in the cost of production per BTC as more hash power competition has entered the network. This is occurring at times when Bitcoin prices are consolidating within lower ranges around $20,000, which is believed to create elevated income stress on the mining industry. 

On the other hand, the miner revenue per hash denominated in USD & BTC has dropped consistently, with the BTC denominated being at an all-time low of 4.06 BTC per day. Considering the USD, the average revenue for the miners per day is around $78,000 to $88,000 considering the present BTC price, which have slumped down to October 2020 levels. 

Way back then, Bitcoin price was trading around $10,000 compared to the present levels, which are around $20,000. Therefore, even though a 66% increase is witnessed in the hash rate, the miner’s revenue appears to be halved. Hence, it can be estimated that the average cost of Bitcoin production hovers just below the current prices. 

Hence any significant decline in the Bitcoin(BTC) price could intensify the income stress over the miners who continue to hold 78,400 BTC in their treasuries. No doubt, these may note be distributed wholly, but potential risks may continue to haunt the BTC price rally.

Additional Read: BTC Price above $19000

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