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Mining BTC is harder than ever — 5 things to know in Bitcoin this week

Bitcoin wakes up to near $28,000 ahead of a jump to a new BTC mining difficulty record as billionaire investor Ray Dalio conjures the chilling thought of "World War III."

Bitcoin (BTC) starts a new week firmly back in the “Uptober” spirit as the weekly close gives way to a classic short squeeze.

In a return to classic BTC price volatility of the kind seen earlier in the month, the largest cryptocurrency is tackling $28,000 ahead of the first Wall Street open.

While still in an established trading range, Bitcoin is keeping traders on their toes — both longs and shorts are getting caught out by short-term spot price moves, and liquidations are mounting.

Sentiment is fluctuating in step with these moves. Heading toward the top of the range, Bitcoin sees a flurry of bullish projections, with these replaced by fear and foreboding when downside reenters.

Well-known market commentators thus remain overall cautious, even as October — traditionally Bitcoin’s best-performing month — plays out.

Behind the scenes, the signs are solid — network fundamentals are headed to new all-time highs, and difficulty is due what could end up its third-largest hike of 2023.

With macroeconomic data giving way to a focus on geopolitical tensions in the Middle East this week, there is plenty for Bitcoin investors to keep an eye on when it comes to external sources of BTC price volatility.

Cointelegraph takes a closer look at these market phenomena and more in Cointelegraph Markets’ weekly rundown of BTC price triggers waiting in the wings.

BTC price: Short squeezes and "old" coins

Weekly close volatility on Bitcoin did not disappoint this week, with one short squeeze following another to see BTC/USD add $1,000, data from Cointelegraph Markets Pro and TradingView confirmed.

BTC/USD 1-hour chart. Source: TradingView

The climate headed into the first Wall Street open is decidedly different to that over the weekend and before, where downside characterized the landscape amid problematic macroeconomic reports from the United States.

Now, optimism is returning, with Michaël van de Poppe, founder and CEO of MN Trading, calling the trip to multi-day highs of $27,975 a “great move.”

“Dips are for buying, most optimal entry would be $27,300,” he told X subscribers in part of the day’s commentary.

Van de Poppe further predicted continuation of the uptrend.

BTC/USD annotated chart. Source: Michaël van de Poppe/X

Covering the impetus behind the latest action, monitoring resource CoinGlass noted liquidations among short BTC positions.

“At 27450, a large number of shorts have been liquidated,” it concluded alongside a liquidation heatmap for BTC/USDT perpetual swaps on largest global exchange Binance.

“Next focus on the liquidation levels of 26500 and 27660.”
BTC/USDT liquidation heatmap. Source: CoinGlass/X

Popular trader Crypto Tony was more cautious, having previously warned of the potential for significant downside pressure taking Bitcoin all the way back to $20,000 in the coming months.

For research firm Santiment, meanwhile, there was more to the change of tone than merely short squeezes.

“Older” BTC was on the move, it showed, having left their wallets after an extended period of dormancy immediately prior to the return to $27,000.

“The largest amount of dormant $BTC changing wallets since July, these spikes in our Age Consumed metric indicate price direction reversals,” part of accompanying comments on an illustrative chart stated.

BTC/USD annotated chart. Source: Santiment/X

Dalio warns over 50/50 outcome of "World War III"

In contrast to last week, the macro landscape in the coming days contains less by way of significant data prints from the U.S.

Instead, nerves over potential market impact from the ongoing Israel-Hamas conflict are taking center stage, while the specter of inflation lingers in the background.

The latter was previously all too clear, as successive data releases last week and before showed U.S. inflation persisting beyond market expectations.

The Federal Reserve’s next meeting to set interest rates is due on Nov. 1, and with two weeks remaining, inflation cues will be all too important for risk asset sentiment.

“2 weeks until the November Fed meeting,” financial commentary resource The Kobeissi Letter summarized on X while shortlisting the week’s main U.S. financial events.

These include a speech from Fed Chair Jerome Powell, one of a total of 17 Fed speakers due to take to the stage this week.

In a sign of the extent to which politics may end up influencing sentiment, Kobeissi was one of many who referenced a grim forecast from billionaire investor Ray Dalio, founder of Bridgewater Associates, the world’s largest hedge fund.

In a LinkedIn post on Oct. 12, Dalio warned that the risk of “World War III” occurring had increased to 50% over the past two years.

“Fortunately, the progression toward a world war between the biggest powers (the US and China) has not yet crossed the irreversible line from being containable (which it is now) to becoming a brutal war between the biggest powers and their allies,” he wrote.

“If these major powers do have direct fighting with each other, in which one side kills a significant number of people on the other side, we will see the transition from contained pre-hot-war conflicts to a brutal World War III.”

GBTC "discount" closes in on two-year minimum

Beyond BTC price action, a firm resurgence is underway in the biggest Bitcoin institutional investment vehicle.

The Grayscale Bitcoin Trust (GBTC) is now trading at its smallest discount to net asset value (NAV) — the Bitcoin spot price — since December 2021.

As Cointelegraph reported, the discount, which was once a premium, was almost 50% earlier in the year, and GBTC’s turnaround has come in tandem with legal victories for operator Grayscale over U.S. regulators.

Now, markets appear to be more confident than ever that a spot price exchange-traded fund (ETF) — which Grayscale plans to create and launch out of GBTC — will get the go-ahead, opening up a flood of institutional interest in Bitcoin in the process.

“One significant feature of GBTC is that it doesn't offer a straightforward mechanism for redeeming shares for actual Bitcoin, and it trades over-the-counter (OTC),” popular trader and podcast host Scott Melker, known as “The Wolf of All Streets,” wrote in part of recent X analysis.

“This structural element can lead to instances where its market price deviates from the underlying BTC value. Factors like market speculation, investor sentiment, liquidity constraints, and even regulatory news can influence this price divergence.”

Melker continued that the door opening to GBTC becoming an ETF was “still far from a sure thing.”

“Concurrently, the U.S. Securities and Exchange Commission (SEC) is also scrutinizing several other spot Bitcoin ETF proposals, including those from financial giants like Fidelity, Blackrock, and Franklin Templeton, which adds another layer of complexity and uncertainty to the landscape,” he noted.

GBTC premium vs. asset holdings vs. BTC/USD chart (screenshot). Source: CoinGlass

Mining difficulty set for imminent new record

The latest BTC price increase has helped boost prognoses for Bitcoin network fundamentals.

Ahead of its next automated readjustment on Oct. 16, Bitcoin difficulty is currently forecast to expand to new all-time highs, per data from monitoring resource BTC.com.

Bitcoin network fundamentals overview (screenshot). Source: BTC.com

This is nothing new in 2023, the year in which both difficulty and mining hash rate have frequently achieved new records. The upcoming difficulty hike, however, could make it into the top three year-to-date at nearly 7%.

Should it lock in, difficulty will cross the 60 trillion mark for the first time, reflecting the increasingly stiff competition among miners and unparalleled Bitcoin network security.

Hash rate estimates meanwhile vary significantly by resource. Raw hash rate data from MiningPoolStats shows the latest all-time high of 497.66 exahashes per second (EH/s) hitting on Oct. 9.

Bitcoin raw hash rate data (screenshot). Source: MiningPoolStats

The high difficulty combined with comparatively modest BTC price levels inevitably opens questions over miner profitability. With expenses running ever higher per bitcoin, concerns periodically appear over how incentivized miners are to continue.

Just as with hash rate, estimates vary over how expensive the per-bitcoin aggregate production cost really is, with a multitude of factors including physical location all playing a part in the tally.

As Cointelegraph reported, next year’s block subsidy halving will additionally cut the amount of BTC received per mined block by 50%.

“I think price is okay for miners atm, but come halving and increasing difficulty needs to increase rapidly,” James Straten, research and data analyst at crypto insights firm CryptoSlate, wrote in part of X commentary last week.

A precarious "Uptober"

Does the fate of “Uptober” 2023 hang in the balance?

Related: Bitcoin signals potential range expansion— Will SOL, LDO, ICP and VET follow?

Even modest changes in BTC spot price can influence the month-to-date gains for October thanks to the strength of the current trading range, now in place since March.

While negative just last week, the push to $28,000 now means that BTC/USD is up 3.5% since the beginning of the month.

With two weeks until the monthly close, Bitcoin’s ultimate performance remains anyone’s guess. 3.5%, while far from poor, would still constitute Bitcoin’s weakest October month since 2018.

Data from CoinGlass further shows the worst October on record in 2014 produced “only” 12% losses for Bitcoin, leaving the door open for a new red record should conditions deteriorate.

BTC/USD monthly returns (screenshot). Source: CoinGlass

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.

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Bitfarms increases mining pace, generates 411 BTC in September

Bitfarms, one of the largest Bitcoin miners in the world, believes that many of its best growth opportunities will arise from the upcoming BTC halving.

The Canadian Bitcoin (BTC) mining firm Bitfarms has been actively scaling operations, significantly increasing the amount of mined BTC last month.

Bitfarms mined a total of 411 BTC in September 2023, up 7.3% from the amount mined in the previous month, the company announced in its latest mining update on Oct. 2.

Out of 411 BTC mined, Bitfarms sold 362 BTC, generating total proceeds of $9.5 million. The firm continues to hold 703 BTC — worth nearly $20 million at the time of writing.

The mining production increase is a result of Bitfarms continuing to install new miners and fully energizing its Argentina facility at Rio Cuarto to 51 megawatts (MW). With new installations, Bitfarms has reached a total operating capacity of 233 MW, having increased it by 24% in 2023.

Also, Bitfarms increased its hash rate by 9% in September from 6.1 exahashes per second (EH/s). Despite significant growth, the hash rate is still slightly below the firm’s third-quarter target of 6.3 EH/s, reflecting some electrical infrastructure delays in Bitfarm’s Québec facility at Baie-Comeau.

According to Bitfarms CEO Geoff Morphy, the company continues to believe that many of its best opportunities for growth will arise from the next Bitcoin halving expected to occur in April 2024. The upcoming event — which happens once every four years — will cut the Bitcoin miner block reward from 6.25 BTC to 3.125 BTC, significantly increasing the costs of mining.

“To this end, we are focused on infrastructure and balance sheet strength to provide the financial flexibility to move aggressively when conditions for growth are optimal,” Morphy said.

Related: Bitcoin miner Marathon mines invalid block in failed ‘experiment’

Despite Bitfarms posting a significant increase in mining production in September 2023, the firm’s mining pace is slightly lower than the figures recorded in 2022. The amount of mined BTC in September was 14.6% lower than in 2022. Bitfarms has mined 3,692 BTC year-to-date, while in 2022, the firm generated 3,733 BTC over the same period.

Bitfarms’ key performance indicators in 2023 versus 2022. Source: Bitfarms

The news comes as Bitcoin’s mining difficulty experienced a 2.7% month-over-month surge in September and Bitcoin miners anticipate higher BTC prices. According to some estimates, BTC mining difficulty will drop by 0.7% at its next automated readjustment on Oct. 2.

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Bitcoin halving to raise ‘efficient’ BTC mining costs to $30K

Bitcoin miners may see “severe” economic consequences from BTC price action staying below $30,000 after the 2024 halving, Glassnode warns.

Bitcoin (BTC) Ordinals are boosting miner profits, but “income stress” is looming, new research warns.

In the latest edition of its weekly newsletter, “The Week On-Chain,” analytics firm Glassnode predicted fresh problems for miners after Bitcoin’s next block subsidy halving.

Bitcoin halving impact on miners could be “severe”

Bitcoin miner competition is exploding, with hash rate — the estimated combined processing power deployed to the blockchain — at record highs.

For Glassnode, this indicates unprecedented conditions for miners trying to eke out a living at current BTC price levels.

Ordinal inscriptions are helping, with these acting as “packing-filler” which turns empty blockspace into a source of revenue for miners.

“Naturally, as blockspace demand increases, miner revenues will be positively affected,” it wrote.

Bitcoin Mean Hash Rate (7-day moving average) chart (screenshot). Source: Glassnode

The proportion of income received from fees has increased between 1% and 4% compared to lows seen during Bitcoin bear markets, but by historical standards remains modest.

“Meanwhile, the amount of hashrate competing for these rewards has increased by 50% since February, as more miners, and newer ASIC rigs are established and come online,” “The Week On-Chain” notes.

This hash rate spike is laying the foundation for an upcoming showdown. In April 2024, miner rewards per block will drop 50%, doubling the so-called “production cost” per BTC. Currently around $15,000, this will pass $30,000 — above the current spot price.

Glassnode presented two models for estimating the price at which miners, on aggregate, fall into the red, with the above comparing issuance to mining difficulty.

“By this model, we estimate that the most efficient miners on the network have an acquisition price of around $15.1k,” researchers explained.

“However, the purple curve shows the post-halving ‘doubling’ of this level to $30.2k, which would likely put the majority of the mining market into severe income stress.”
Bitcoin Difficulty per Issuance Pricing Model (screenshot). Source: Glassnode

A previous model put the average miner acquisition price at $24,300 per Bitcoin — around 8% below spot as of Sept. 28.

Bitcoin Difficulty Regression model (screenshot). Source: Glassnode

BTC price incentives

Others are more optimistic about how miners will handle the build-up to the halving.

Related: Bitcoin exchange volume tracks 5-year lows as Fed inspires BTC hodling

In an interview with Cointelegraph this month, analyst Filbfilb, co-founder of trading suite DecenTrader, reiterated that miners would up BTC accumulation in advance of the event.

“Miners are incentivized to ensure that prices are well above marginal cost prior to the halving,” he wrote in an X (formerly Twitter) thread in August.

“Whether they collude consciously, or not they are collectively incentivized to send prices higher before their marginal revenue is effectively halved.”
BTC/USD chart with miner accumulation data. Source: Filbfilb/X

Assisting BTC supply dynamics will be what Filbfilb calls smart money “buying the rumor” over the halving and its own impact on the amount of BTC being minted.

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.

SWIFT Plans to Launch CBDC Interconnection System in Next Two Years

FOMC versus BTC price ‘local bottom’ — 5 things to know in Bitcoin this week

Bitcoin network fundamentals have never looked better, as optimism trickles back when it comes to BTC price strength in a key Fed rate decision week.

Bitcoin (BTC) starts the new week with optimism as traders greet the first green weekly candle in over a month.

BTC price strength appears to be gradually improving after a weak August and start of September, with BTC/USD climbing toward $27,000.

A solid weekly close provides the backdrop to what promises to be an interesting few days, which will include a key United States macroeconomic event as a potential volatility driver.

The U.S. Federal Reserve will meet to decide on interest rate policy, and any surprises could have significant repercussions for risk assets, including crypto.

Elsewhere, things are looking promising for Bitcoin, with network fundamentals set to surge higher to new records.

Strength “under the hood” is similarly being reflected in hodler behavior, with wallet numbers continuing to shoot higher regardless of BTC price action.

Cointelegraph takes a look at these topics and more as Bitcoin begins what is likely its most eagerly-awaited week of September.

Trader eyes BTC price “local bottom”

Bitcoin offered little volatility over the weekend, but calmer trading conditions are already being challenged into the new week, data from Cointelegraph Markets Pro and TradingView shows.

The Sept. 17 weekly close soon gave way to upside volatility, and at the time of writing, bulls are attempting to build on that foundation to crack new month-to-date highs.

BTC/USD 1-hour chart. Source: TradingView

Popular trader Credible Crypto thus suggested that the weekend zone could well form a “local bottom.”

“This region continues to be defended, with buyers stepping in here once again. Has the makings of a local bottom/base being formed imo,” he told X (formerly Twitter) subscribers overnight, alongside a chart of order book liquidity on the largest global exchange, Binance.

“I think we probs push back up to 27k+ soon.”
BTC/USD order book data for Binance annotated chart. Source: Credible Crypto/X

A prior post noted the lack of promise in shorting at weekend levels, with bid liquidity improving.

The weekly close meanwhile excited Michaël van de Poppe, founder and CEO of trading firm Eight, who saw key support holding at the 200-week exponential moving average (EMA).

“Bitcoin is closing above the 200-Week EMA, which is vital for bullish continuation,” he explained.

“Next week we should continue to do so and price starts to look similar to the 2015/2016 cycle.”

Van de Poppe uploaded a chart showing the interplay between the spot price and the 200-week EMA, currently at $25,700, since 2020.

“Markets are consolidating with a weekly close strongly above the 200-Week EMA for Bitcoin. The chances of the correction to be finished are increasing day by day,” he added in a separate post.

BTC/USD annotated chart. Source: Michaël van de Poppe/X

Some are staying sober on the outlook for Bitcoin into 2024. Among them is popular trader and analyst Rekt Capital, who continues to eye the potential for a bearish double-top pattern to play out on weekly timeframes.

“Make no mistake - Bitcoin is in an early stage Bull Market,” he wrote in part of weekend X analysis.

“Long-term the outlook is bullish. Mid-term? Over the next 7 months, we may or may not get 1 last major correction. Will it happen? It would be wise to at least be ready for it if it does.”
BTC/USD annotated chart. Source: Rekt Capital/X

FOMC volatility due with rate pause odds at 99%

This week, the word on everyone’s lips is FOMC — the Federal Open Market Committee — which will meet to decide on interest rates going forward.

If history is a guide, the Sept. 20 decision will induce at least some form of volatility across risk assets, with Bitcoin and crypto no exception.

The landscape surrounding the latest FOMC meeting is mixed, with last week’s macro data showing inflation beating expectations, yet markets overwhelmingly believe that the Fed will not raise rates further to combat it.

According to CME Group’s FedWatch Tool, the odds of rates remaining unchanged are almost unanimous.

Fed target rate probabilities chart. Source: CME Group

This could reduce the impact of the FOMC event, but conversely, a curveball decision that goes against market appraisals would be felt all the more keenly.

“This week sets up the rest of 2023,” financial commentary resource The Kobeissi Letter summarized while highlighting upcoming macro data releases and more.

“Fed guidance on Wednesday sets the tone for the next few meetings. Expect to see lots of volatility this week.”

Explaining the likely outcome of FOMC, crypto and macro insight resource Ecoinometrics suggested that the market odds were no surprise based on Fed signals.

“There will be no rate hike at the FOMC meeting on September 20. That’s what the Fed Funds futures are pricing,” it wrote at the weekend.

“And actually they have been very consistent about that for a long time now. The fact that the latest inflation numbers aren’t exactly going in the right direction didn’t change anything to that.”
Fed funds futures annotated chart. Source: Ecoinometrics/X

An accompanying chart added that the market “never had doubts” about what would happen in September.

Difficulty, hash rate return to new records

Back to Bitcoin and a return to the “up only” style of fundamental growth is set to characterize the coming week.

Mining difficulty, which dipped 2.65% at its last automated readjustment two weeks ago, will cancel out its losses on Sept. 19.

The latest estimates from BTC.com suggest that difficulty will increase by a solid 4.6% — taking it to new all-time highs in the process.

Bitcoin network fundamentals overview (screenshot). Source: BTC.com

2023 has seen a broad uptrend in difficulty challenged only briefly, even as spot price action delivered more challenging conditions.

The story is the same for hash rate — the estimated processing power deployed by miners — which continues to set new records of its own.

A conspicuous spike into the new week has become a talking point in its own right, with optimism increasing among commentators as a result.

“The bitcoin network hashrate is at an all time high,” Nicholas Cary, co-founder of Bitcoin data resource Blockchain.com, noted earlier this month.

“What does this mean? The difficulty is a measure of how difficult it is to mine a Bitcoin block, or in more technical terms, to find a hash below a given target. A high difficulty means that it will take more computing power to mine the same number of blocks, making the network more secure against attacks.”
Bitcoin estimated hash rate chart. Source: Blockchain

Blockchain.com estimated hash rate at 422 exahashes per second (EH/s) as of Sept. 17, while BTC.com currently puts the figure at 430 EH/s.

Bitcoin address numbers reach multiyear highs

Just as there is no stopping Bitcoin miners, the user base likewise appears to be relentlessly expanding.

The number of new BTC wallets being created is now at its highest since late 2017, the time of Bitcoin’s old all-time high of $20,000, data from on-chain analytics firm Glassnode shows.

Bitcoin new addresses chart. Source: Andre Dragosch/X

According to the firm’s address tracking metric, even the later trip to $69,000 failed to spark as big a reaction in new address creation.

Active addresses, however, do mimic mid-2021, returning to those levels for the first time this month.

The data was uploaded to X by Andre Dragosch, head of research at crypto investment firm Deutsche Digital Assets. Dragosch quizzed whether BTC price performance would copy the return to form across the Glassnode metrics.

“All-time high in addresses with 0.01 Bitcoin or less,” James Straten, research and data analyst at crypto insights firm CryptoSlate, added about further Glassnode data.

“Fifth or so strongest accumulation from this cohort in the past five years. This asset continues to be cornered by a small cohort.”
Bitcoin wallets with a balance of 0.01 BTC or less chart. Source: James Straten/X

Crypto fear is never far away

While things may be looking up across the Bitcoin ecosystem, the average crypto investor is yet to regain their confidence.

Related: Bitcoin price all-time high will precede 2024 halving — New prediction

According to the latest data from the Crypto Fear & Greed Index, the mood characterizing crypto continues to be one of “fear.”

The extent of the cold feet is modest — the Index, which normalizes sentiment on a 0-100 scale, is now just below its “neutral” 50 mark.

Fear has nonetheless dominated since mid-August, with price triggers a key influencer.

Crypto Fear & Greed Index (screenshot). Source: Alternative.me

Analyzing net unrealized profit and loss data among the BTC supply, meanwhile, popular trader and analyst Titan of Crypto revealed what he called a “striking correlation” between this year’s environment and that seen in the run-up to previous Bitcoin bull runs.

“I think we might witness a similar price action as Bitcoin had in the first 2 cycles,” part of his commentary forecast.

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.

SWIFT Plans to Launch CBDC Interconnection System in Next Two Years

Bitcoin revenue per terahash nears record lows as hashrate soars

As the Bitcoin network hash rate tops 414 EH/s, miners are struggling to stay afloat amid plummeting profitability.

Bitcoin mining revenue or “hash price” — a measure of dollars earned per TH/s per day — has slumped to levels not seen since the collapse of FTX in November 2022, while hash rate has reached new highs. 

Over the past week, Bitcoin network hash rate topped 414 exahashes per second (EH/s) on Aug. 18 marking a new peak for the metric.

The peak has seen network hash rate surging 54% from what it was at the beginning of 2023 and 80% over the past 12 months, according to Blockchain.com.

BTC hash rate and price 1 year. Source: blockchain.com

However, while the network looks good in terms of security, things are not so rosy for Bitcoin miners as revenue has fallen sharply, hitting levels when BTC fell to a market cycle low of around $16,500 in November 2022.

According to HashPriceIndex, revenue is just $0.060 per terahash per second per day, around half of what it was in early May when the Bitcoin Ordinals inscription frenzy caused a heavy demand for block space.

Market analyst Dylan LeClair commented on the falling revenue and hash rate peak stating that more efficient new rigs will keep being produced, “but it's almost time for the price to outpace,” meaning that prices need to adjust upwards to keep mining profitable at such high hash rates.

Miner revenue per terahash. Source: Glassnode

Related: Bitcoin miners need BTC price over $98K by the halving

Bitcoin miners have reportedly been relying on funds from stock sales in the second quarter to keep them afloat during the bear market.

On Aug. 24, Bloomberg reported that the 12 major publicly traded miners raised about $440 million through stock sales in Q2.

Mark Jeftovic, who runs the Bitcoin Capitalist newsletter, said “Some mining companies are diluting shareholders at an excessive rate,” before adding “If they are diluting you faster than Bitcoin is going up, then you are going the wrong way on a treadmill.”

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TeraWulf increases self-mined BTC in Q2 while Hut8 looks to USBTC merger

U.S. miner TeraWulf expanded its Bitcoin mining capacity in 2023, resulting in 70% more BTC mined in in Q2.

Bitcoin (BTC) mining firm TeraWulf has seen a drastic increase in BTC rewards after increasing its mining capacity in the first half of 2023.

According to the company’s latest quarterly filing with the U.S. Securities and Exchange Commission, TeraWulf mined a total of 1441 BTC through the first half of the year. 508 BTC were mined in Q1, while the firm added another 375 self-mined BTC to its balance sheet in Q2.

The increase in hashrate and mined BTC also led to an uptick in quarterly revenue for the company, up from $11.5 million to $15.5 million in Q2. The company pointed to their increased hashrate and the recovering market value of Bitcoin as primary reasons for its improved quarterly financials.

Related: TeraWulf goes nuclear: 8,000 rigs spool up in Nautilus mining facility

The firm now has over 50,000 new generation Bitcoin miners which it operates across its Lake Mariner site in New York and its Pennsylvania nuclear-powered Nautilus operation. TeraWulf’s operational hash rate sits at 5.5 EH/s while it has 160 MW of capacity for miners at the two sites.

TeraWulf's nuclear-powered Nautilus mining location.

The company also confirmed that it plans to expand its operation at Lake Mariner by another 43 MW by the end of 2023. The new building in New York is set to host 18,500 new generation S19j XP miners from Chinese manufacturer Bitmain.

TeraWulf estimates that its additional capacity at Lake Mariner will increase its self-mining hashrate by a further 58% from 5.0 EH6 to 7.9 EH/s.

Meanwhile Hut8 announced that it had seen a decrease in hashrate and self-mined Bitcoin in Q2 of 2023 as reflected in its mid-year results. The company mined 399 BTC in Q2, noting a 58% decrease compared to Q2 2022.

Hut8 put the drop in mined BTC down to three factors, which including the overall increase in Bitcoin mining difficulty, the suspension of operations at the firm's North Bay Facility and electrical issues that are ongoing at its Drumheller site.

Related: Bitcoin hash rate spikes as analysts say miners coming back online

Hut8 is also diversifying the use of its infrastructure away from solely mining Bitcoin. It’s high performance computing operation continues to generate an average of $4 million per quarter, while this number is expected to grow once its five year deal as an computing infrastructure provider to Interior Health begins towards the end of 2023.

Hut8 added that its Drumheller site had been hamstrung by high energy input levels that had led to some of its mining equipment to fail. The firm said 20% of its installed hash rate had been affected as a result.

Hut8 self-mined Bitcoin balance sits at 9,136 BTC, currently valued at $368.7 million. The company sold 396 of the 399 BTC it mined through Q2, resulting in $14.7 million in revenue. Hut8 expects to increase its hash rate capacity once a planned merger with USBTC is complete.

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Bitcoin on-chain data shows miners offloading BTC as revenues shrink

Bitcoin miners have been selling BTC since the start of June, potentially adding further pressure to the BTC price.

Bitcoin’s on-chain data provides evidence that Bitcoin miners are offloading their holdings. The factors influencing the selling pressure could be reduced earnings from a cooldown in Ordinals activity as well as mining difficulty and hash rate reaching an all-time high. 

According to on-chain analytics firm Glassnode, “Miners have been sending a significant amount of coins to exchanges.”

Glassnode data shows Bitcoin (BTC) miners’ inflows to exchanges spiked to a three-year high on June 3 to levels last seen during the bull market of early 2021.

Coin Metrics data also shows a decline in the one-hop supply metric of miners, which measures the quantity of Bitcoin stored in addresses that receive coins from mining pools.

The metric recorded a consistent uptrend in miner holdings since May 2023; however, the miners reversed their accumulation trend in the second week of June.

One-hop supply of Bitcoin miners. Source: Coin Metrics

Increase in mining difficulty and reduced Ordinals activity

Bitcoin mining difficulty, which refers to a measure of how difficult it is to find a new block in the Bitcoin blockchain network, reached an all-time high at the start of June.

Bitcoin difficulty adjusts periodically to ensure that new blocks are added to the blockchain approximately every 10 minutes on average. When the network’s computation capacity increases, it readjusts to make mining more difficult and vice versa.

The difficulty is adjusted every 2,016 blocks, which is roughly every two weeks, and is based on the total computational power, or hash rate, of the network. The last adjustment occurred on May 31, with a 3.39% increase in total difficulty.

Bitcoin mining difficulty. Source: Blockchain.com

The increase in Bitcoin difficulty reduces the earnings of miners, eating into their profitability and possibly increasing their losses.

Moreover, the competition among miners has increased since the last difficulty adjustment, with the network’s hash rate rising to a new all-time high of 381 exahashes per second on June 11. The next difficulty adjustment due this week will likely add to the selling pressure.

Bitcoin Ordinals activity, which was responsible for an increase in miner revenue, declined in May, leading to reduced earnings for miners. The total fees paid for Ordinal inscriptions on Bitcoin dropped to a two-month low, with trading volumes on nonfungible token marketplaces showing a similar trend.

The seven-day average earnings of miners, according to Glassnode data, dropped from a high of $33.9 million in May to $25.8 million at the start of June.

The 7-day moving average of Bitcoin miner revenue (orange) and BTC's price (black). Source: Glassnode

June also marked the start of summer, with hot temperatures in the Northern Hemisphere putting a significant load on some mining farms due to the increased cost of electricity.

In 2022, the summer heat waves caused miners in Texas to temporarily shut down operations. Reportedly, Texas accounts for around 15% of the mining capacity in the United States.

The heat waves could worsen in 2023, leading to a downturn in the network’s mining hash rate.

Related: Bitcoin miners have earned $50B from BTC block rewards, fees since 2010

Identifying miners’ stress levels

Currently, the cost of producing Bitcoin for the existing mining hardware lies between $35,532 and $21,244. With Bitcoin’s price holding above $25,000, the downtrend in Bitcoin’s mining hash rate could be limited.

However, if the situation worsens over the summer and the mining cost increases without a proportionate increase in the BTC price, the industry could fall back into capitulation mode, marked by accelerated BTC selling and a reduced network hash rate.

Bitcoin price chart with production cost indicator. Source: TradingView

Moreover, while Bitcoin’s hash rate has continued to rise, Bitcoin’s hash price metric — the market value assigned per unit of hashing power — declined significantly in May, suggesting a cooldown in demand for mining hardware.

According to an update from Hashrate Index, the “hashprice [PH] is back below $70.00/PH/day for the first time since mid-March” after touching an average of $82.23 per PH per day in May, a 14.8% decline.

It remains to be seen how far the sell-off extends and whether or not Bitcoin Ordinals activity comes back in the meantime.

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.

This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts, and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

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Bitcoin mining firms keep building despite BTC mining profitability slump

Crypto mining firm CleanSpark has been aggressively expanding its fleet of mining machines this year, despite mining profitability being far from its all-time highs.

Despite a 44% decline in Bitcoin (BTC) mining profitability over the last year, some Bitcoin mining companies have continued to build and increase production, according to recent announcements.

On June 1, American Bitcoin mining firm CleanSpark announced that it had purchased 12,500 brand-new Antminer S19 XP units for $40.5 million. The deal worked out at $23 per terahash per second (TH/s), which is lower than the average market price.

The news comes as Bitcoin mining difficulty reached an all-time high of over 50 trillion on June 1, putting further pressure on miners. The network hash rate was also near its peak level at 395 EH/s on May 30.

CleanSpark’s purchase agreement stipulated that 6,000 machines are scheduled to be shipped by the manufacturer in June, and the remainder will be shipped in August.

Antminer S19 XP units have a hash rate of 141 TH/s, with the combined purchase providing an additional total hash rate of 1.76 exahashes per second to its current 6.7 EH/s. Zach Bradford, CEO of CleanSpark, said:

“This purchase ensures that we are prepared to meet and potentially exceed our year-end target of 16 EH/s.”

CleanSpark’s mining farms are located in Georgia. According to its website, the firm has 67,700 mining machines in operation and has mined 2,395 BTC year-to-date.

Bitcoin Hashprice over the past year. Source: Hashrate Index

The company has continued its expansion despite declining Bitcoin mining profitability, which has declined to $0.071 per TH/s per day, down 44% over the past 12 months and 82% since the crypto market peak in late 2021, according to Hashrate Index.

In February, CleanSpark purchased 20,000 brand-new Antminer S19j Pro+ units and in April it added 45,000 S19 XP ASIC rigs to its fleet.

Related: Mining difficulty passes 50 trillion — 5 things to know in Bitcoin this week

In other recent company updates, Bitfarms announced that it had mined 459 BTC in May, increasing production by 6.5% year-on-year. “A 47% year-over-year increase in our hash rate was offset by a 65% increase in network difficulty in the same period,” said Chief Mining Officer Ben Gagnon.

Cipher Mining announced a record production in May with 493 BTC mined. The increases were due to the transaction fee spike during the BRC-20 memecoin minting craze that peaked in early May.

On May 31, Compass Mining inked a deal with hosting provider Arthur Mining to open a new facility in Ohio.

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Bitcoin metrics to the moon: ATH for hash rate, daily transactions and Ordinals

While the Bitcoin hash rate briefly touches new highs, Bitcoin Ordinals contribute to daily transactions exceeding 500,000.

A lot of Bitcoin (BTC) miners just came online. The Bitcoin hash rate, or the total computing power of the Bitcoin blockchain, just soared to 439 exahashes per second (EH/s). Moreover, the number of transactions processed on the Bitcoin blockchain in one day exceeded 682,000, with over 300,000 Ordinals inscribed. 

The hashrate, in orange, soars to 439 EH/s. Source: timechainstats.

These milestones demonstrate the network's strength and stability, as well as the increasing adoption of Bitcoin for various use cases, all while the banking sector in the United States fractures.

The Bitcoin hash rate, a measure of the computational power dedicated to securing the blockchain, has reached an all-time high, signifying increased confidence in the network's security. The hash rate is a crucial indicator of the network's health, as a higher hash rate means more miners are participating, thus making the network more resistant to attacks.

The surge in hash rate reflects growing investments in mining infrastructure despite fluctuations in the price of Bitcoin. More and more territories and regions around the world are mining Bitcoin, with increasing amounts of renewable energy, allaying fears of centralization or environmental impacts that have shrouded Bitcoin mining in the past.

However, as Denver Bitcoin, a well-known Bitcoin miner with Upstream Data Inc, points out, the hash rate surge may be short-lived. It’s important to “Watch 1500-block to 5k-block avg time to get an understanding of true hashrate,” he shared in a tweet:

The hash rate may be temporarily surging–partly driven by a resurgence in the popularity of Bitcoin ordinal inscriptions. Bitcoin ordinals are unique, non-fungible tokens (NFTs) built on the Bitcoin network, each representing a distinct position in the Bitcoin blockchain. Each ordinal is “inscribed” on a Satoshi (the smallest denomination of a Bitcoin), and owners can prove digital ownership of their Sat.

Ordinals have gained traction among collectors, investors, and enthusiasts, offering a new way to engage with the Bitcoin ecosystem. Bitcoin ordinals fan Dan Held, for example, shares that altcoin advocates engage with Bitcoin for the first time due to their creation.

Ordinals reach 3 million.Source: Dune

The number of inscriptions in a 24-hour period exceeded 350,000 on May 1, as the total number of ordinals exceeded 3 million. Given that each ordinal inscription also counts as a transaction, the number of Bitcoin transactions has also soared.

Daily transactions reach 682,000. Source: timechainstats

As more people buy, sell, and trade Bitcoin ordinals, the number of daily transactions on the network has significantly increased to 682,000. The mempool, or the "waiting area" for incoming transactions before they are confirmed, is currently very busy. The cheapest transaction fee sits at 8 sat/vB, or about $0.30–way above its lows of 1 sat/vB. If users are looking to send money to wallets on the Bitcoin base chain, the costs are significantly higher than usual due to the surging number of ordinal inscriptions.

Related: ​​Bitcoin Ordinals community debates fix after inscription validation bug

For some, Bitcoin ordinals offer another role for the network that goes above its activities as a store of value and medium of exchange. For others, such as Dr. Adam Back, number 76 on Cointelegraph’s Top 100, ordinals are useless.

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Bitcoin Miners Contend With Fifth Network Difficulty Increase of 2023

Bitcoin Miners Contend With Fifth Network Difficulty Increase of 2023Bitcoin miners are contending with the fifth network difficulty increase since February 24, 2023, following a 1.72% rise on April 20 at block height 786,240. The network’s difficulty now stands at 48.71 trillion, marking a 22.62% increase over the last 55 days since block height 778,176. Bitcoin’s Difficulty Has Risen More Than 22% Since Block […]

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