The “hash price” – a key metric of miner revenue – has crashed close to its lowest level ever. This is putting huge pressure on the Bitcoin mining industry. But the situation is not dire yet, as most machines continue to churn out profits.
The Hash Price Plunge
Data from Luxor Technology’s Hashrate Index shows Bitcoin’s hash price plunged 52% to 0.00459 per terahash/second on June 24. This was after reaching a two-month high of 0.0095 on June 8.
The hash price briefly edged toward its all-time low of 0.00447 on May 1, but has since rebounded slightly to 0.00479.
What’s Driving This?
The hash price crash is being driven by the confluence of several factors:
- Bitcoin’s Price Slump
The price of Bitcoin has tumbled 68% in the past week to $20,590. Negative sentiment has grown due to Mt. Gox’s planned sale of $2.6 billion worth of Bitcoin.
- Reduced Miner Rewards
Rewards have fallen due to Bitcoin’s fourth halving in April. This cut the block subsidy from 6.25 BTC to 3.125 BTC (worth $18,800 at current prices).
- Lower Mining Difficulty
Bitcoin’s network difficulty has also dropped 5% to 8.368 trillion hashes. This came after hitting a record high on April 25.
Mass Capitulation Not Here Yet
According to Mitchell Askew of Blockware Solutions, most mining machines are still profitable. This is despite the hash price languishing around $0.005/THs.
While miners are feeling serious pain, true capitulation does not appear to have arrived yet. For now, the majority of rigs continue their operations.
Conclusion
Bitcoin miners are enduring a margin squeeze not seen in years. However, a total collapse does not look imminent. Most miners seem determined to weather the storm for now, despite profitability hovering near all-time lows.
