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Bitcoin Miners Face a Squeeze as BTC Production Cost Remains Well Above Spot Market Value

Bitcoin miners are dealing with lots of pressure following the recent difficulty adjustment increase on Nov. 20, 2022, and the leading crypto asset dropping further in value against the U.S. dollar following FTX’s collapse. Statistics recorded this past weekend show that bitcoin’s average cost of production has been a lot higher than bitcoin’s USD value recorded on spot market exchanges.

Statistics Show Bitcoin’s Cost of Production Is a Lot Higher Than the Leading Crypto Asset’s USD Value
On Sunday, Bitcoin.com reported on Bitcoin’s difficulty rising by 0.51% at block height 764,064, and the increase pushed the difficulty to an all-time high at 36.95 trillion. After that difficulty transition, data shows the overall global hashrate dropped from 317 exahash per second (EH/s) to 233 EH/s.

The hash rate is currently coasting along at 250.59 EH/s, according to records from coinwarz.com. At the same time, BTC’s fiat value dropped a great deal after FTX collapsed and filed for bankruptcy protection.

Statistics on Nov. 21, 2022, show that the cost of bitcoin production is much higher than BTC’s current USD spot market value. The metrics recorded by macromicro.me indicate that the average mining cost is $19,662 today, while the USD value of BTC is recorded at 16,120 nominal U.S. dollars per unit.

Macromicro.me stats show that the price of bitcoin compared to the cost of producing BTC has been lower since October 6, 2022. Macromicro.me says that the web portal uses data collected from the University of Cambridge to “figure out average mining costs for bitcoin.”

“When mining costs are below the market value of bitcoin, more miners will join,” macromicro.me details. “When the costs of mining are higher than the revenues of the miner, the number of miners will decrease.”

Bitcoin miners are facing pressure as the cost of producing BTC remains well above the spot market value
Braiins.com Stats as of November 21, 2022.
In addition to the metrics shown on macromicro.me, Glassnode’s retail price chart indicates that the retail price is at an all-time low. The chart highlights “a measure for estimating the daily income of miners, relative to their estimated contribution to the network’s hashing power,” Glassnode’s description notes.

Analytics from braiins.com also indicates that the current retail value is lower than the current retail price. Similar to the macromicro.me stats, braiins.com metrics show that the change occurred around October 6, 2022. If bitcoin prices do not go up or if they go down, a number of BTC miners will face pressure outside the industry if they are not already facing this situation.

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