The Bitcoin network has achieved an all-time high in hashrate, intensifying the challenges faced by miners who are already grappling with a tough environment.
The increasing “horsepower” on the Bitcoin network is a positive development for its security but poses significant difficulties for miners due to heightened competition.
On October 12, Bitcoin’s hashrate reached an unprecedented 447 exahashes per second, as reported by Blockchain.com. A slightly higher average figure of 481 EH/s is presented by Bitinfocharts, but both sources concur that this metric has never been higher.
This surge in hashrate, climbing by 77% since the start of the year and a remarkable 170% since the peak of the bull market in November 2021, means that mining the next block on the blockchain has become more challenging than ever.
Furthermore, the upcoming difficulty adjustment in a few days is expected to be as high as +7.4%. Difficulty is a measure of the competitive landscape among miners and currently stands at an all-time high of 57.3T.
Consequently, mining profitability, often referred to as hashprice, has dwindled to $0.06 per TH/s per day. This represents an 85% decline from the $0.40 per TH/s per day achieved during the bull market peak.
Bitcoin miners are currently grappling with a triple challenge of soaring hashrates and difficulty, plummeting asset prices, and rising energy costs. Adding to their concerns, JPMorgan has predicted a 20% drop in hashrates after the next halving, expected in late April or early May.
Notably, the United States now commands the largest share of the global hashrate at 40%, and major asset management firm BlackRock has invested in several leading Bitcoin mining companies, including Riot Platforms, Marathon Digital, Cipher Mining, Hut 8, and Terawulf. In December, it extended financial support to the struggling Bitcoin miner Core Scientific.
As trader Oliver Velez observed, the U.S. is clearly making a concerted effort to secure the lead in the hashrate competition.
Looking ahead, if Bitcoin prices fail to recover soon, miner capitulation may become a reality. The forthcoming halving, slated for about six months from now, will further complicate matters for miners as the block reward is halved. It has been estimated that BTC prices would need to reach approximately $90,000 for mining to remain profitable at the current level.
However, the current market trend is moving in the opposite direction. BTC remains steady for the day at $26,844 but has witnessed a 4% decline since the previous weekend. A solid support level is identified at $26,000, which could be the short-term destination.