Decline in Bitcoin Hash Rate is likely to affect ASIC prices
BTC prices are not the only thing falling at the moment. After the recent record highs, the Bitcoin hash rate is also dropping sharply.
The Bitcoin hash rate has fallen by around 14% since its all-time high earlier this month. The current hash rate is 234 EH/s (exahashes per second), according to Blockchain.com. Furthermore, there has been a sharp decline in the metric since November 22nd, with 11% lost in one week.
According to industry outlet Hashrateindex, a supply shock of miners and lenders dumping machines could put significant downward pressure on the ASIC market.
Lower demand for new hardware is likely to affect the prices of new and used machines.
Bitcoin Hash Rate Hardware Affected
Timing is everything when it comes to profitable Bitcoin mining. Markets are cyclical, and bear markets and hash rate drops are common for crypto. ASIC (application specific integrated circuit) miner prices have fallen by around 80% since November of this year.
The current hash price (also known as profitability) is at a record low of just $0.058. The hash price is measured in dollars per day per terahash per second ($/d/TH/s). It has fallen by 84% since the same time last year.
At such low levels, the average daily income from an Antminer S19j Pro (104 TH/s) is only $6. There may even be losses in areas where electricity prices have increased. The particular device can be found listed on retail websites for between $2,000 and $2,500.
The falling profitability has significantly increased the payback time for ASIC miners. Currently, the repayment period is around 27 months on average, up from around 12 months this time last year.
A looming Bitcoin halving in 2024 is also likely to affect mining profitability, as block rewards are halved.
With all these factors working against Bitcoin miners, hardware prices are set to fall over the next year or two. However, miners will once again reinforce their rigs after the hash rate and difficulty drop to where profits can be made.
BTC Miner Capitulation
The hash rate decline has resulted in a dead cross on a long-term technical indicator. The hash band, which measures the moving average of hash rate, has just turned into the capitulation range.
The last time this happened was in June after the Terra Luna crypto market crash.
BTC prices are up 1.8% on the day to $16,461 at press time, according to CoinGecko. However, they are at a two-year low and more selling pressure from miners could see Bitcoin fall even more in the months ahead.
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