Bitcoin's hash rate has dropped for 287 days, causing mining difficulties to decline as mining stocks rise despite Bitcoin's price plunge.
The Bitcoin network has faced a prolonged decrease in its hash rate for 287 consecutive days, marking one of the most extended downturns in its history, according to Bitcoin Magazine Pro.
This decline has also led to a 19.9% drop in mining difficulty from its peak. The current downturn is notable as it lacks the clear causation seen during the previous significant declines, such as the aftermath of China's mining ban.
Mining Stocks Surge Despite Bitcoin's Price Plunge
Over the past year, Bitcoin's value has fallen by approximately 46%, yet shares of publicly traded mining companies have generally seen gains:
- Hut 8 — up 431%;
- Riot Platforms — up 62%;
- HIVE Digital — up 37%.
Conversely, MARA Holdings has experienced a notable decline, with its stock price dropping by 29%. This divergence from historical trends, where mining stocks typically closely followed Bitcoin's price movements, has raised questions among analysts.
Investors are now beginning to view miners as providers of computational infrastructure rather than solely as Bitcoin investments. This shift comes as mining stocks previously correlated strongly with tech sector stocks, a trend that seems to have reversed recently.
Despite selling over 32,000 BTC in the first quarter alone to cover operational costs, mining stocks continue to appreciate, highlighting a significant market shift.
Revenue Challenges for Miners
Miners generate revenue primarily from block rewards and transaction fees. However, daily earnings from block rewards have fallen to a historic low, partly due to reduced mining capacity and increased block time intervals. Experts suggest that the protocol's normal operation is a key factor in this decline.
Historically, the Bitcoin community has maintained that even as the number of coins per block decreases, their value would rise, stabilizing dollar revenues. However, with Bitcoin's price currently in decline, this correlation is under scrutiny. The Puell Multiple indicator shows miner revenues have dropped to around $30 million daily, down from closer to $40 million.
Transaction fees are contributing minimally to revenue, with only about $200,000 generated daily. This is insufficient to cover the costs of mining operations, as fees currently support network activity for only about ten minutes each day.
In previous cycles, fees occasionally made up a significant portion of miner revenue, but they have now dwindled to nearly zero, according to analysts.
Notably, on July 11, mining difficulty saw a 5% reduction to 127.17 T, following a prior 10.09% drop in mid-June, which was later partially recovered.
