Bitcoin profitability for miners plunges massively after five weeks of losses
Following the fall in the cryptocurrency market, Bitcoin has officially become unprofitable for cryptocurrency miners, according to the “Bitcoin Production Cost” indicator on TradingView, developed by user “capriole_charles”.
The indicator suggests that Bitcoin has just entered the “unprofitability” zone, which has not happened since October 2020, back when BTC was trading at around $12,000. Most likely, Bitcoin’s profitability for miners stays at even lower numbers as the electricity cost used in the indicator is not relevant.
But even with the data used in 2021 and 2020, Bitcoin’s profitability for traders is now in the negative zone due to the increased difficulty of the network followed by the hash spike after the rapid drop during the Chinese mining crackdown.
What happens next?
While some traders and analysts were not expecting Bitcoin to drop so drastically in such a short period, the market already saw similar things happening back in 2018. The first thing that market participants should expect is the drop in hashrate and mining difficulty, as more Bitcoin producers will switch over other assets in order to stop losing money.
As bitcoin mining difficulties decrease further, the market should expect a gradual recovery in bitcoin production costs as miners would need less electricity to issue a block on the blockchain.
Effect on the market
But while the drop in mining profitability largely affects miners, the market should expect a slight decrease in the selling pressure in the future as there will be less new coins issued on the network.
With selling pressure diminishing, it should be easier for bulls to push the price of the top cryptocurrency higher whenever buying power reappears in the market.
