Bitcoin mining seems to be in a condition of upheaval, with roughly 50% of the hashing power down while miners migrate from China, and it’s unclear when they’ll be able to return. Simultaneously, those miners who have not been impacted by the Chinese clampdown have seen 50% of their competition vanish overnight, resulting in increased earnings. With figures for the last few weeks already available, the magnitude of the swings is clear.
On Friday, a day before the complexity change, daily mining income was about $20.7 million. It reached $29.3 million the next day, and $31.9 million on Tuesday this week. That really is the result of a “quite intriguing dynamic,” according to a video tutorial to this week’s issue of Glassnode’s periodical, “The Week On-chain.”
“We have such an interesting development where nearly half of the mining power is temporarily unavailable and shouldering significant costs due to logistics and purely not hashing, having equipment that is presently not working, and the other 50% has effectively seen half their rivals leave the network,” it clarified.
“While the system is now generating the same amount of coins as before, it is having difficulties winding down, we are now in a position where 50% of the network has doubled their revenue while the other 50% is effectively generating zilch.”
Profitability for active miners has returned to levels observed when BTC/USD traded near $55,000–$60,000. Miners aren’t the only ones who have experienced the pain. According to Glassnode, average block durations reached new highs during the previous week, only exceeded during Bitcoin’s “bootstrapping” stage in 2009–2010, before the cryptocurrency really had a stable price in US dollars.
Rest of the on-chain indicators capture the divide between different factions of miners as well. These demonstrate, among several other things, how some people are using their treasuries to cover shifting costs despite being unable to mine new currencies and earn a portion of block rewards and fees.
Others, on the contrary, have been hanging on to additional BTC each block than they are spending, continuing an upswing that has lasted in spite of the price decrease, which has now reached above 50%. “This is one to keep an eye on,” Glassnode suggested.