According to data from bitcoin mining performance tracking firm btc.com, mining difficulties have increased by 4.89%. Popular cryptocurrency reporter Woo Blockchain also reported about 5% of bitcoin miners’ growing difficulties. Even though the increase in production value was accompanied by a rapid increase in mining activities that pumped out capital, mining revenues declined significantly.
While the market traded between a weekly high of $31,900 and a low of $27,395. This is recorded as the first sign of a green market after a long red market, with continued doubts and tensions in the market further increasing the reliance on long-term holders.
Furthermore, the Glassnote report noted that bitcoin miners continue to decline in revenue, production costs have increased, and market conditions remain bearish and hurt long-term holders. Glassnode estimates market value from a miner’s perspective with the help of a market metric called the pull multiple. The pull multiple valuation calculates the ratio of bitcoin’s daily issuance price (in USD) to the 365-day moving average of this price.
Capitulation may occur, as the pull multiple falls into the sub-0.5 zone, at a later stage of a drawn out bear market. This metric currently stands at 0.66, a critical point that could lead to a capitulation limit.
“According to an analysis by Glassnode, miner balances are shrinking and miners are spending extra, miner net position changes currently indicate a reduction in total miner balances between 5k and 8k BTC monthly.”
It reports a change in the behavior of miners, where the creation of around 12k BTC was observed in the balance during the first drop from ATH. BTC miners are adding to BTC selling pressure as Luna LFG sold over 80k BTC.
“Mining is now more expensive, rewards offered in USD continue to decline and a potential miner capitulation cycle may continue. There is reason to believe that the market is within the second and final capitulation phase of the bitcoin bear market.”
Despite massive revenue stress, new miners have joined the network and existing miners have expanded their operations. Whereas money spent on mining hardware and facilities can put even more pressure on miners’ balance sheets.