On-chain data shows Bitcoin is now retesting the associated fee of production price for miners, suggesting that this cohort may soon finally find some relief.
Bitcoin Miners Might Find Relief After A Period Of Immense Pressure
In keeping with data from the on-chain analytics firm Glassnode, the common cost of production for miners is now around the present price levels. The relevant indicator here is the “difficulty regression model,” which is an estimation of the associated fee of Bitcoin production that the common miner incurs.
Because the name already implies, this model is predicated on the concept of “mining difficulty,” which is a built-in feature on the BTC blockchain that decides how hard miners might want to work so as to successfully mine a block on the network.
For this model, Glassnode has made the idea that the problem is “the last word distillation of mining cost, accounting for all of the mining variables into one number.”
To relate the problem with the market cap (in order that a price of production “price” could be obtained from the metric), the model uses a log-log regression evaluation.
Now, here’s a chart that shows the trend within the Bitcoin difficulty regression model over the previous few years:
Looks like the worth of the crypto has been approaching the metric in recent days | Source: Glassnode on Twitter
Because the above graph displays, the Bitcoin difficulty regression model has a price just around the present BTC price levels immediately. Because of this the associated fee of mining 1 BTC that the common miner has to pay in response to this model is now about what the crypto itself is valued at.
The chart also includes data for the “difficulty multiple,” which is a metric that simply highlights the gap between the present price of the coin and the problem regression model. Negative values of the indicator suggest the worth is higher than the associated fee of production for miners immediately, while it’s lower within the case of positive values.
From the graph, it’s apparent that the problem multiple has been positive since across the time of the FTX crash, which suggests that in this era of the last couple of months or so, the common miner has been producing Bitcoin at a loss.
Miners had already been coming under immense pressure earlier within the bear market as a result of a large number of things like the worth plummeting and the electricity costs becoming higher, but this era for the reason that downfall of FTX made their incomes even worse, resulting in multiple bankruptcies of major names within the sector corresponding to Core Scientific.
Nevertheless, if the present price retest of the problem regression model level is successful and BTC breaks higher, miners would finally have the option to get some relief after what has been a really terrible run.
BTC Price
On the time of writing, Bitcoin is trading around $18,900, up 13% within the last week.
The worth of the asset seems to have sharply surged in the previous few days | Source: BTCUSD on TradingView
Featured image from Brian Wangenheim on Unsplash.com, charts from TradingView.com, Glassnode.com