Bitcoin [BTC]The struggle of the biggest cryptocurrency continues to see new days and nights in the crypto market. While investors feared losing their savings to a price correction, BTC miners may have taken another approach to deal with this decline.
difficulties
Bitcoin recorded its worst performance in August since 2015, after the monthly candle closed down 14%. In fact, as of press time, BTC has fallen below the $2k mark as it was trading around $19.9k. Here is a seven-day red layout for the largest coin.
Following the free fall, many analysts have placed a bearish trend to alert bitcoin enthusiasts. For example, CryptoTony warned that the (Bitcoin) phase was set for deep losses going forward. In a tweet sent on September 1, the famous businessman couple,
this is my macro proceed #bitcoin currently and as long as we see
– Change in market behavior and become macro bullish (withdrawing $30,000 and holding higher)
I’m leaning towards a macro drop down where I’ll look for the ladder #altcoins For swings https://t.co/qz7RAgw4gH
— Krypto Tony (@CryptoTony__) 1 September 2022
Needless to say, the said drop also saw huge liquidations with the BTC spot market. This meant that traders started selling their holdings. But not everyone took the same approach.
road less traveled
Surprisingly, miners haven’t given up on bitcoin yet as the difficulty of mining has reached a critically high level. BTC initiated mining difficulty adjustments at block height 751,968, with mining difficulty increasing by 9.26% to 30.98T.
According to data from on-chain monitoring resource BTC.com, this will be the most upward difficulty adjustment since January this year.
Furthermore, this figure represents an increase of 9.26% since August 18, when the mining difficulty stood at 28.35 trillion.
Well, mining difficulty determines how hard it is for a miner to verify transactions, bundle them into a block, and add it to the blockchain.
If there are few miners, the difficulty will decrease, while when the number of miners increases, the mining difficulty also decreases. Ergo, growth is a sign of sheer demand.
What does this imply?
Well, the increase in both difficulty and hash rate reflects a strong belief among miners in the long-term profitability of their network involvement. This belief comes at a time when mining operations will not get the same profit(s).
According to BitInfoCharts, mining profitability has been declining steadily since August 18, when it stood at $0.109 per THash/s (based on a seven-day moving average).
At the time of writing, profitability has dropped to just $0.082 per THash/s. Indeed, a related signal when coupled with a drop in the price of BTC. In fact, the price is down 17% in one month and 60% in one year.
Now the question is, can the miners bear such losses and continue their mining operations? Let’s wait and see.