The bitcoin hash fee hit a brand new all-time high on Oct. 3 at over 245 exahashes per second, however on the identical time, bitcoin (BTC) miner profitability is close to the bottom ranges ever recorded.

With costs within the low $20,000s and an estimated network-wide price of manufacturing of $12,140, ​​Glassnode evaluation suggests “miners are considerably on the cusp of acute earnings misery.”

Bitcoin community hash fee. Supply: Hashrate Index

On the whole, problem, a measure of how “troublesome” it’s to mine a block, is a part in figuring out the manufacturing price of bitcoin mining. A higher level of problem implies that extra processing energy is required to mine a brand new block.

Utilizing a problem regression mannequin, the information exhibits an R2 coefficient of 0.944, and the final time the mannequin flashed indicators of miner misery was when BTC was flushed to $17,840. It’s at the moment hovering close to $18,300, which isn’t removed from the worth vary of the final two weeks.

Bitcoin Problem Regression Mannequin. Supply: Glassnode

The hash fee hitting a brand new all-time high successfully implies that miner margins will proceed to be squeezed. Belongings which can be unprofitable can both mine at a loss, assuming the long run worth of BTC will finally make up the price distinction, or they will pull the plug and wait till both the problem drops or power prices enhance.

With the latest improve in hash fee, problem can be prone to improve over the subsequent week, with estimates suggesting a 6% to 10% adjustment.

Bitcoin community hash fee (left) and projected problem adjustment (proper). Supply: BTC.com

Beneath are estimates of miner profitability assuming an electrical energy tariff of 0.08 kilowatts per hour.

Profitability of Bitcoin ASIC. Supply: DxPool

Relying on a miner’s capital and working prices, the earnings statistics above clearly illustrate the balancing act some miners are at the moment making an attempt to stroll on.

Regardless of the strain on profitability, impartial market analyst Zack Voell instructed that miners with wholesome steadiness sheets are consistently in search of methods to broaden their operations, and the latest hash fee spike might be associated to Bitmain’s newest S19 XPs coming on-line.

Miners who aren’t broke or suing one another hold betting what they will. Each month there are just a few headlines (at the very least ) about new crops being deliberate or powered. And far of the brand new hashrate comes from XPs coming on-line

— Zack Voell (@zackvoell) October 3, 2022

Is Bitcoin clear?

What buyers actually need to know is that if the bitcoin worth is obvious or if there may be an elevated danger of one other selloff attributable to miner capitulation.

In accordance with Colin Harper, Head of Analysis at Luxor Applied sciences:

“Miners are nonetheless promoting within the present surroundings (e.g. Riot offered 300 BTC final month and Bitfarms offered 544 BTC). In my estimation, we’re being pushed down by normal promoting fairly than miner promoting specifically. If the BTC worth went to $10,000, along with extra miners capitulating by means of BTC gross sales, there would even be lots of rigs flooding the market. We’re not making an attempt to spotlight Riot or Bitfarms, these are simply the latest updates we now have, other than Hut 8, which did not sell BTC.”

However, Joe Burnett, the senior analyst at Blockware Options, mentioned the majority of the miner sell-off is probably going over, lowering the opportunity of one other capitulation-level sell-off.

Burnett advised Cointelegraph:

“I feel the small miner capitulation Bitcoin has seen this summer time has knocked out some weak and overleveraged gamers. I do not suppose we’ll see one other important drop in hash fee with out Bitcoin making new lows beneath $17,600. That does not imply particular person weak miners will not fall off this 12 months and subsequent, however the brand new rigs that will probably be connected will doubtless be sufficient to maintain the hash fee up.”

When requested in regards to the improve in hash fee placing strain to accommodate higher problem ranges and the knock-on impact on miners’ profitability, Burnett mentioned:

“Particular person weak gamers could bounce and be knocked out, however there will probably be no important and sudden ‘miner capitulation’ and not using a drop in BTC worth. Margins are positively tight.”

The Glassnode mannequin of the “implicit earnings stress of the Puell a number of with the express stress commentary of Problem Ribbon Compression” has lately exited the zone the place “miner capitulation is statistically doubtless,” suggesting that one other miner-driven Sellout is unlikely second.

Risk of capitulation for bitcoin miners. Supply: Glassnode

Nonetheless, analysts had been cautious to emphasise that the entire dimension of Bitcoin held by miners stands at practically 78,400 and any sharp transfer decrease in BTC worth might set off promoting from distressed miners.

The views and opinions expressed herein are solely these of the writer and don’t essentially replicate the views of Cointelegraph.com. Each funding and trading transfer includes danger, it is best to do your personal analysis when making a call.