The miner’s profitability could be harmed by the rising cost of mining blocks. Since the price of Bitcoin has been falling over the course of the year, from $46,000 to roughly $19,300, analysts estimated that the difficulty hike would reduce the miners’ profits by about 20%.
Leading analytics company Glassnode issued a dire warning about a particular group of bitcoin owners who collectively own about $1.5 billion worth of BTC.
According to Glassnode, bitcoin’s hash rate, which measures the processing power of the network, is at an all-time high.
While an increase in network hash power puts BTC miners in a vulnerable financial position, a greater hash rate suggests a more resilient network that is more secure against an attacker.
“Bitcoin’s difficulty has adjusted to a new all-time high due to the rapid increase in network hash power. This increases the cost of production of BTC and puts additional pressure on miners.”
The analytics company estimates that it will now cost $19,300 to manufacture one Bitcoin through mining, which is more than the currency’s current value of $19,067. According to Glassnode, the combination of rising production costs and a low price for BTC indicates that miners face a significant danger of capitulation.
Difficulty Ribbon Compression is an on-chain indicator that employs a simple moving average of bitcoin network difficulty to assess the effect of miner selling pressure on the price of the King cryptocurrency. The pull multiple is a statistic that examines BTC miner earnings.
Glassnode further emphasizes that BTC miners have been actively selling off their stock in recent months.
About 78,200 bitcoins ($1.49 billion) are now held by bitcoin miners in their coffers, and the amount has been increasing overall since mid-2019.
The deceleration in miner treasury growth over the past several months has been the most dramatic in the recent three years.
