Hashprice, a metric coined by Luxor to gauge mining profitability, estimates the daily income of miners relative to their estimated contribution to the Bitcoin network’s hash power. Simply put, it represents the expected value that miners can anticipate for each TH/s of hashing power they contribute daily.
Recent reports by Glassnode indicate that hashprice is currently hovering above $62 PH/s, marking one of the highest levels observed since mid-December of the previous year.
But what factors are contributing to this increase? Notably, the price of Bitcoin (BTC) has surged well over $100,000, reflecting a remarkable 56% increase over the past three months, providing much-needed relief for miners. Additionally, there has been a slight uptick in miner fees, averaging around 12 BTC per day—the highest figure seen in over a month—partly fueled by increased inscription activity within the network.
It is essential to consider the forthcoming halving event scheduled for April 2024, a fundamental occurrence in which mining rewards will be halved. Following the last halving, hashprice saw a decline from approximately $115 PH/s. The anticipated reduction in rewards puts pressure on miners, who faced challenges in share price appreciation throughout the previous year, with mining revenue frequently falling below the rolling 365-day simple moving average (SMA). However, since November, hashprice has reclaimed this critical average, a historically bullish indicator for the industry.
The hash rate—the computational power dedicated to mining on a proof-of-work blockchain—recently reached all-time highs, concurrently driving the network difficulty to unprecedented levels. This increase in difficulty reduces mining profitability, as it becomes progressively more challenging for miners to reap rewards.
In an exclusive interview with CoinDesk, Andre Dragosch, the European head of research at Bitwise, shed light on the current landscape for miners. “We have recently seen a decline in network hash rate since the all-time highs in early January. Meanwhile, the price of Bitcoin has increased, and the overall transaction count has picked up again. This has led to a recovery in hash price, which should technically incentivize miners to continue ramping up their hash rate,” he explained.
Dragosch further noted that, “Overall, Bitcoin miners appear to be well capitalized, judging by the continued increase in Bitcoin miner holdings since the beginning of the year. This suggests that miners are selling less of their mined Bitcoin daily, which is a positive indicator for the sector’s health going forward.”
