- Drop in Bitcoin hashrate raises concerns about network security and centralization.
- Declining mining revenue could lead to increased selling pressure on BTC.
The highly volatile nature of the cryptocurrency market continues to affect Bitcoin[BTC] miners, putting them under great pressure. The constant fluctuations in Bitcoin and the broader cryptocurrency sector have made it challenging for miners to generate steady income from their mining activities.
Read Bitcoin [BTC] Price forecast 2023-2024
A brighter future for miners ahead?
However, recent observations have revealed a significant drop in Bitcoin’s hashrate over the past 24 hours, with a notable drop of 3.2%. A lower hash rate indicates that less computing power is required to validate transactions and add them to the Bitcoin blockchain.
This reduction in computational power translates into lower energy and resource costs for miners, potentially benefiting revenue generation.
Source: bitawr
While a lower hashrate may seem beneficial in the short term, it can be a concern for the stability and security of the network in the long run. A reduced hashrate opens doors for possible exploitation by malicious actors, allowing them to take control of a significant portion of the Bitcoin network. This undermines the security and decentralization of the network and poses a potential threat.
To add to the declining hashrate, miner earnings also continued to trend downwards. Data from Blockchain.com revealed a drop in daily miner revenue from $30,191 to $21,378 in the past month.
Source: blockchain.com
The diminishing income for miners may force them to sell their Bitcoin holdings to maintain profitability. This increased selling pressure could also lead to a decline in Bitcoin’s price.
Under pressure?
At the time of writing, the king of cryptocurrencies was trading at $30,187. Although the price has risen significantly in recent weeks, Bitcoin’s market value to realized value (MVRV) ratio has also risen sharply during this period. This ratio indicated that a majority of holders were profitable, which may have motivated them to sell their BTC holdings in the future.
The Long/Short ratio further showed that long-term holders were predominantly in a profitable position. This could be a positive indicator as long-term holders are less likely to sell their Bitcoin holdings in the near future.
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Source: Sentiment
Despite the challenges, traders remain optimistic about Bitcoin’s future. This can be explained by looking at the preponderance of long positions over short positions according to Coinglass data.
