Unprecedented Heights in Network’s Power
The Bitcoin network’s computational power, known as the “hashrate,” soared to new heights on October 12, reaching an apex of 447 exahashes per second (EH/s), as reported by Blockchain.com. This milestone, corroborated by Bitinfocharts with a slightly higher average of 481 EH/s, marks the highest the metric has ever soared, indicating a robust security status for the Bitcoin network but simultaneously amplifying the challenges for miners who are now plunged into fiercer competition than ever before.
The Rising Tide of Difficulty and Competition
Since the onset of 2023, the hashrate has surged by 77%, and astonishingly, it has escalated by 170% since the bull market’s zenith in November 2021. This relentless ascent signifies that mining the subsequent block on the blockchain is now an unprecedented challenge. The imminent difficulty adjustment could witness a surge as high as +7.4%, pushing the competition amongst miners to new thresholds, with the difficulty currently standing at an all-time high of 57.3T.
The repercussion of these developments is a stark plummet in mining profitability, also termed as hashprice, which denotes the anticipated value of 1 TH/s of hashing power per day. This metric has tumbled down to $0.06 per TH/s per day, a drastic 85% nosedive since the bull market’s peak.
A Triple Whammy for Bitcoin Miners
From my point of view, Bitcoin miners are currently grappling with a triple predicament: soaring hash rates and difficulty levels, depressed asset prices, and escalating energy costs. Furthermore, a forecast by JPMorgan suggests an impending 20% decline in hash rates following the next halving event slated for late April or early May.
Despite these daunting challenges, not all miners are on equal footing. Variations in scale, operational efficiency, access to capital, and growth prospects differentiate them. For instance, CLSK stands out due to its optimal balance of scale, growth potential, power costs, and relative value, while MARA, despite being the largest operator, contends with the highest costs.
U.S. Dominance and the Impending Halving Event
The United States, currently commanding a 40% share of the global hashrate, is evidently positioned as a formidable contender in the hashrate war. This dominance is further bolstered by significant investments from asset management behemoth BlackRock in several leading Bitcoin mining firms.
However, if Bitcoin prices do not recuperate promptly, the industry might witness another miner capitulation, especially with the upcoming halving event that will slash the block reward by half. It’s estimated that BTC prices would need to breach the $90K mark to sustain mining profitability at current levels. Yet, the markets are trending contrarily, with BTC price lingering at $26,844, shedding 4% since the previous weekend.
In conclusion, while the record hashrate underscores the robust security of the Bitcoin network, it ushers in a period of intensified adversity for miners, necessitating agile adaptation and strategic foresight to navigate the evolving landscape.
