Bitcoin Hashprice Reaches All-Time Low Amid Record Mining Difficulty: Is a Crisis Looming?

The Bitcoin mining community is currently facing unprecedented challenges, as mining difficulty has surged to a record high while hashprice has plummeted to an all-time low. Mining profitability is now at its lowest point since 2023, raising concerns about the sustainability of the sector. As the market remains risk-averse, increased miner capitulation could have significant implications.

Key Takeaways

Mining difficulty has reached an all-time high, while hashprice is at a record low, causing significant stress on the Bitcoin mining sector.
Mining profitability has dropped to just 0.0334 USD per day for every 1 TH/s, the lowest figure since 2023.
Ongoing market conditions, marked by a risk-off sentiment, have resulted in substantial sell-offs and lingering fears of further capitulation.
Bitcoin (BTC) has struggled to maintain support levels around $90k and $95k, with current trading around $86k, prompting concerns about broader market impacts on Bitcoin fundamentals.

Bitcoin hashprice hits record low as mining difficulty reaches ATH: Crisis ahead?

Record Mining Difficulty Against Falling Hashprice

The Bitcoin mining community forms a vital part of the cryptocurrency’s foundation. On November 3rd, mining difficulty reached an unprecedented level of 155 trillion, making it more challenging than ever to earn Bitcoin through mining. This development, while strengthening the network, coincides with a sharp decline in hashprice, which has dipped to an all-time low of $34.49 per PH/s according to the Hashprice Index. This represents a more than 50% drop in just a few weeks, marking the lowest point in Bitcoin's history.

Bitcoin hashprice
Source: Hashprice Index

To illustrate the impact, a miner with 1 PH/s of mining power would earn $34.49 daily before costs. This significant reduction in earnings directly affects miner profitability, which is a crucial indicator of Bitcoin's underlying health. The combination of skyrocketing mining difficulty and plummeted hashprice poses heightened competition among smaller miners, as elevated costs become unsustainable against dwindling returns. Given this situation, it is essential to consider whether this scenario poses a risk to the network's overall security.

With Bitcoin trading approximately 31% lower than its all-time high of $126k, a pressing question arises: can larger miners sustain their operations under these challenging conditions, or will declining profitability destabilize the entire Bitcoin network?

Mining Profits Hit Multi-Year Lows as BTC Value Dips

Profitability plays a critical role for miners to remain viable. Following the recent halving event, the block reward has decreased to 3.125 BTC, meaning miners are earning fewer coins per block. Consequently, they require higher Bitcoin prices to maintain profitability, particularly with record-high mining difficulties pushing operational costs upwards.

Currently, Bitcoin Mining Profitability has fallen to a mere 0.0334 USD per day for each 1 TH/s. This translates to a meager return of just 3 cents per day for miners operating at this capacity, marking the lowest recorded profitability since 2023.

Mining
Source: Bitinfochart

In summary, with falling hashprice, soaring mining difficulty, and declining BTC prices, miner profitability has plummeted to historical lows. Simultaneously, the costs associated with mining have surged to around $112k, which is approximately 1.3 times higher than Bitcoin's current market value.

As a result, the pressure is not confined to smaller miners; capitulation trends are beginning to affect the broader community. If Bitcoin were to decline further, we could potentially witness significant exits from large-scale miners, leaving the sector precariously vulnerable.