Bitcoin miners are experiencing painful challenges, similar to those faced in December 2022, with a 7.6% reduction in activity, according to a new analysis.
Price down, costs up
Bitcoin’s hashprice has reached an all-time high, posing difficulties for miners dealing with rising costs and a decreasing BTC price.
IntoTheBlock reports that in June alone, Bitcoin miners sold off more than 30,000 BTC, equivalent to $2 billion.
This sell-off is largely due to the April halving event, which cut block rewards in half, and consequentlly, the revenue in half.
The halving events often lead to the so-called miner capitulation, making mining less profitable and forcing miners to sell their Bitcoin holdings to cover expenses.
Next to this, many miner could be forced shutting down the older, less efficient mining equipment, due to its high energy consumption and lower BTC production, compared to the newer models.
Fire trial
Bitcoin’s hashrate has fallen by approximately 15% over the past month, which is a relatively big reduction in the overall computational power contributed by miners to the network.
The hashrate measures the number of calculations, the hashes performed per second to validate and secure transactions.
Contrary to the popular myth, mining doesn’t involve solving complex cryptographic puzzles, but involves generating random numbers and guessing them to match a target set by the network’s difficulty, again, and again, and again.
This is the proof of work, which can’t be faked, and can’t be arbitrary like the proof of stake voting, wich is the renamed version of the corporate stakeholder voting.
This repetitive and energy-intensive process makes the network secure, by preventing cheating and manipulation.
Maximum security
The hashrate is a central metric for assessing the security level of the Bitcoin network and the difficulty miners face in earning block rewards.
A decline in the hashrate may signal reduced network security and increased challenges for miners, which can affect the overall health of the Bitcoin ecosystem.
But despite this decline, the Bitcoin network remains highly secure and reliable, providing the strongest security of any computer network worldwide.
