As a seasoned analyst with years of experience in the volatile world of cryptocurrencies, I find myself constantly on the lookout for trends and patterns that might indicate shifts in market dynamics. The recent downturn in Bitcoin mining profitability, as evidenced by the Jefferies survey, is a clear signal that the industry is facing some challenging times.
In July, miners of Bitcoin (BTC) earned less profit than they did in the preceding month, according to a recent Jefferies survey. This decrease in profit occurred during a time when the value of Bitcoin dropped by approximately 6%, and the network’s hashrate remained consistent. For context, the hashrate – which represents the collective computational power devoted to mining Bitcoin – functions as an indicator of competition within the industry and the level of mining difficulty.
US Bitcoin Miners Produce Larger Share in July
Because of the current state in the Bitcoin mining industry, Jefferies reduced its projected price for Marathon Digital Holdings Inc (NASDAQ: MARA) from $22 to $17. It’s important to mention that Jefferies previously lowered the MARA price target from $24 to $22 in June. Additionally, it decreased the target for Argo Blockchain’s ADRs (ARBK) from $1.50 to $1.20 and its UK-listed shares (ARB) from 11.90p to 9.5p, which is approximately 12 cents in U.S. currency.
Nevertheless, the MARA shares were kept under a holding rating for the month of July. In July, Marathon Digital led as the top Bitcoin producer, yielding around 692 coins, which represented a 17% increase compared to the previous month.
In contrast to June, Bitcoin mining companies in the United States typically produced a higher proportion of BTC in July. As per the bank’s report, they accounted for approximately 21.1% of the total network, compared to 20.7% in May, which was a challenging month for miners. However, Bitcoin mining profitability improved significantly in June.
According to analyst Jonathan Petersen in a previous Jefferies report, June showed a relatively mild rebound following the effects of the halving, which were particularly significant in May.
Given the present state of the mining industry, it’s possible that August could prove to be a challenging month for miners. This is because Bitcoin’s price has decreased by 5%, and the network’s hashrate is on the rise. Currently, Bitcoin is being traded at approximately $58,462.20, representing a 4.49% drop in value over the past day.
BTC Price Plunge Put Miners at a Loss
In July, the struggles in Bitcoin mining became increasingly apparent as its price took a sharp decline at the start of the month. Dropping below the 200-day Simple Moving Average (SMA), this trend is typically associated with a downward pattern. At that point, the original cryptocurrency dipped to levels below $54,000. A significant mining operation called F2Pool presented data indicating that only around five mining rigs had yielded profits for their operators at that time.
As a seasoned cryptocurrency miner with years of experience under my belt, I can attest to the fact that profitability in this field is highly dependent on market conditions and the specific hardware being used. In my personal journey, I’ve observed that certain rigs like Antminer and Avalon have proven to be profitable when Bitcoin prices stay above a certain threshold, such as $53,100, as suggested in the graph. However, it’s important to note that not all mining rigs are created equal. Some older or less efficient models can quickly become unprofitable due to high operational costs outweighing the rewards earned from mining. It’s crucial for miners to carefully consider their hardware choices and keep a close eye on market trends to maximize their returns.
As a researcher, I found myself remarking that Bitcoin miners are teetering on the brink of capitulation, with the S19 model breaking even at approximately $52,000. This situation presents an ideal opportunity for identifying a local market bottom.
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2024-08-15 17:28