Monday Mining Metrics: First Negative Difficulty Adjustment Since September
Bitcoin Mining Update - 12/11/2023
Mining Difficulty drops ~0.96%
After six consecutive positive difficulty adjustments, over the weekend we had a negative adjustment of just under 1%.
The positive price action of the past month was a catalyst to the rise in difficulty as it allowed previously unprofitable miners to plug their machines back in.
It appears that most of the ASICs waiting on the sideline have now plugged back in.
Price Growing Faster Than Hashrate
The absolute best time to be a Bitcoin miner is when the price is growing faster than the hashrate:
Mining profit margins increase
ASIC prices increase
We have recently entered this phase of the Bitcoin cycle.
Given the many bullish price catalysts that we’ve outlined in previous newsletters, it is unlikely that hashrate will be able to match the growth rate of price. New hashrate getting online requires ASIC manufacturing, infrastructure construction, energy production, etc. When the BTC price rips, it rips fast, and hashrate fundamentally cannot keep up.
Incumbent miners, those who already have machines online, are positioned to benefit the most from the coming bull market. They’ll already be online to mine during peak profitability before more competition gets online, and difficulty adjusts up. Moreover, incumbent miners were likely buying hardware during the bear market when ASIC prices were heavily discounted; so they’re seeing appreciation on their Cap EX as well.
It is safe to say that we have entered a new era of high on-chain transaction fees. While fees are down from their local high of 200+ sat/vByte, the network seems to have found equilibrium in the 50-60 sat/vByte range.
There is still a plethora of high-fee transactions in the mempool that would need to be added into blocks before we could see 1 sat/vByte transactions.
The transaction fee market remains the dark horse for Bitcoin miner profitability during the coming epoch.
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We can help you secure all of the top ASICs currently on the market; Antminer S19 XPs, S19k Pros, and Whatsminer M50s.
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All content is for informational purposes only. This Blockware Intelligence Newsletter is of general nature and does consider or address any individual circumstances and is not investment advice, nor should it be construed in any way as tax, accounting, legal, business, financial or regulatory advice. You should seek independent legal and financial advice, including advice as to tax consequences, before making any investment decision.