Leading analytics firm Glassnode warns that a certain group of Bitcoin holders that collectively own nearly $1.5 billion worth of BTC is in danger of capitulating.
Glassnode says that Bitcoin’s hash rate, which measures the processing power of the king crypto’s network, is at an all-time high.
While a higher hash rate indicates an increasingly robust network that is more secure against an attacker, Glassnode says that a surge in network hash power puts BTC miners in a financially precarious situation.
“Bitcoin Difficulty has adjusted to a new all-time high due to a rapid increase in network hash power. This increases the BTC cost of production, and puts additional stress on miners.”
According to the analytics firm, the estimated cost to produce Bitcoin from mining activities now stands at $19,300, above BTC’s current price of $19,067. Glassnode says the combination of increased production cost and low BTC price suggests that miners are at high risk of capitulation.
“This culminates in higher Miner Capitulation Risk, which we capture in a tool tracking the Puell Multiple and the Difficulty Ribbon Compression.
When both metrics are low, it indicates an elevated risk of Bitcoin miner capitulation.”
The Puell Multiple is a metric that looks at BTC miner revenue while the Difficulty Ribbon Compression is an on-chain indicator that uses simple moving averages of Bitcoin network difficulty to determine the impact of miner selling pressure on the king crypto’s price.
Glassnode also highlights that in recent months, BTC miners have been actively selling off their stash.
“Bitcoin miners currently hold some 78,200 BTC ($1.49 billion) in their treasuries, which has been increasing in aggregate since mid-2019.
Recent months have been the most notable slowdown in miner treasury growth in the last three years.”
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