Recent reports indicate that the Bitcoin network hashrate has significantly recovered following the cryptocurrency’s rally to the $69,000 range. This recovery has led to a decrease in selling pressure from miners, largely due to an increase in their profitability. According to CryptoQuant analysts, the drawdown from the all-time high of the hashrate now stands at 3%, compared to 8% on July 9. This surge in profitability is reflected in the Miner Profit/Loss Sustainability metric, which points to a growth in miner revenues relative to the mining difficulty.
The rise in miner profitability suggests that miners are now earning more than they have been since the Bitcoin halving event in April. As a result, miners are less likely to offload their holdings to cover operational costs, leading to a decrease in selling pressure on Bitcoin. The recent rally in Bitcoin prices has further bolstered daily miner revenues, which have surged by approximately 50%. This influx of revenue has also contributed to the recovery of Bitcoin’s hashrate.
Despite the increase in profitability and revenues, daily outflows of BTC from miners have remained relatively low compared to earlier this year. When Bitcoin reached $70,000 in March, daily miner outflows were between 10,000 and 20,000 BTC. However, after the halving event in April, these figures dropped to 5,000-10,000 BTC in July. Larger Bitcoin mining entities have been increasing their holdings, with the total balance of large miners now sitting at 65,000 BTC, up from 61,000 at the beginning of the year. In contrast, smaller mining firms have been selling off their holdings, with their balance decreasing from 59,000 BTC to 51,000 BTC.
Future Risks for Miners
While the increase in profitability and revenues is positive for miners, there are potential risks ahead. CryptoQuant has warned that miners may be at risk of operating at “depressed levels” due to their profitability being heavily influenced by Bitcoin’s price. This dependency on price fluctuations could impact the sustainability of miner operations in the long run.
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