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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 issues a dire warning about a particular group of Bitcoin owners who collectively possess nearly $1.5 billion worth of BTC.
According to Glassnode, the hash rate for Bitcoin, which gauges the network’s processing power, 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 Difficulty has adjusted to a new all-time high due to a rapid increase in network hash power. This increases the BTC cost of production, and puts additional stress 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.
The Difficulty Ribbon Compression is an on-chain indicator that employs simple moving averages of the Bitcoin network difficulty to assess the impact of miner selling pressure on the king cryptocurrency’s price. The Puell 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.
Approximately 78,200 Bitcoins ($1.49 billion) are now held by bitcoin miners in their treasuries, and this amount has been rising 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.