Bitcoin miners in trouble? BTC price Dangerously close to production costs

Bitcoin’s price has been trading below $20,000 for quite some time now, and data from a popular cryptocurrency analysis resource reveals that it is getting dangerously close to BTC’s cost of production.

This could, according to Glassnode, cause “acute income stress in the mining industry.”

Bitcoin’s price close to production costs

The production cost of a BTC includes all the expenses that miners have to make. These include, but are not limited to, utility bills, rent, wages, hardware and anything else that applies.

Popular cryptocurrency analysis resource Glassnode revealed that the current estimated production cost (generalized) is around $18,300.

Bitcoin has been trading very close to the estimated production price since the June selloff.

The difficulty regression model is hovering at $18,300, signaling a potential threshold for acute earnings stress in the mining industry.

In fact, Bitcoin’s price has been trading below $20,000 for the past week. As of this writing, the cryptocurrency is apparently attempting a recovery above the critical level.

BTC Miners Unfazed

Despite the above and general global turmoil in times of geopolitical and economic uncertainty, Bitcoin’s hashrate has managed to chart another all-time high recently.

The current hashrate clocks in at 242 exahashes per second. According to a Glassnode analogy, “this is equivalent to all 7.753 billion people on Earth, each completing a SHA-256 hash calculation approximately 30 billion times every second.”

Is the worst yet?

Glassnode suggests that Bitcoin’s has band began to relax in late August, “giving an indication that mining conditions improved, and hashrate returned online.”

The price hasn’t been able to follow through, but the research firm says that “almost all historical hashish band unwinds have gone ahead of greener pastures in the months that followed.”

However, this does not mean that we are out of the woods yet, at least not immediately. A potential recovery is associated with a previous capitulation, and Glassnode data shows that one may not have happened yet, at least compared to how Mining Pulse performed in previous years.

The chart above measures the average block interval against the target of 600 seconds. Lower values ​​show that blocks are faster than the target, indicating that the hashrate is growing faster than the difficulty adjustments can keep up. On the other hand, higher values ​​show the opposite and are usually a response to specific industry-related shocks, such as miner surrender events.

That said, the latest data indicates that there hasn’t been a dramatic event related to the mining pulse, unlike in previous years.

It remains to be seen whether this more subdued but protracted capitulation event is simply the appetizer, or whether it reflects a new dynamic as more of the hash power is held by better capitalized listed mining companies.