As an experienced financial analyst, I closely follow the Bitcoin market and its underlying fundamentals. The recent decline in the 7-day average Bitcoin mining hashrate to its lowest since early March is a concerning development that could have significant implications for the cryptocurrency’s price.
On-chain data shows the Bitcoin mining hashrate has declined to the lowest since early March.
7-Day Average Bitcoin Mining Hashrate Has Continued To Go Down Recently
The “mining hashrate” is a measurement representing the total computational power being used by miners to mine Bitcoin and add new blocks to the blockchain. Essentially, it serves as a proxy reflecting the mining community’s collective enthusiasm or commitment.
As the value of the indicator goes up, current miners grow their mining operations and fresh participants join the scene. This pattern indicates that the allure of blockchain technology is growing among validators.
An alternate interpretation is that the decreasing metric may signify some miners have chosen to shut down their devices, possibly due to the unprofitability of mining the cryptocurrency for them.
Now, here is a chart that shows the 7-day average Bitcoin mining hashrate over the past year:
The graph above shows that Bitcoin’s 7-day average mining hashrate reached an all-time high (ATH) last month. However, this metric has since experienced a decrease. This downward trend may be contributing to the bearish price action we’ve seen in Bitcoin recently.
Miners primarily earn income by receiving Bitcoin rewards for successfully resolving blocks in the blockchain. The reward’s value and frequency are relatively consistent. Consequently, the sole fluctuating factor linked to these rewards is the current market price of Bitcoin.
When the cost of an asset, such as Bitcoin, decreases, the value of the rewards earned by miners also declines, resulting in a reduction in income for them. Given Bitcoin’s significant price drop in recent times, it is not surprising that some mining operations are experiencing financial difficulties.
After experiencing a significant drop in the mining hasrate’s value following its latest decline, this metric now stands at its lowest point since early March. If Bitcoin continues to hover around its current lows or experiences further decreases, the mining hashrate is expected to continue its downward trend.
As a crypto investor, I’ve noticed that miners have been forced to sell a significant portion of their previously mined rewards due to current market conditions. An analyst highlighted this trend in a recent CryptoQuant Quicktake post.
The chart presented above indicates a significant upward trend in Bitcoin holdings for over-the-counter (OTC) desks. This rise can be attributed to increased selling activities from Bitcoin miners, as suggested by our quantitative analysis.
BTC Price
The price of Bitcoin hovers close to the lower boundary of its current price range, currently sitting at approximately $61,700.
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2024-06-28 08:11