CryptoQuant: Miners’ sell-off period may be over

According to data from CryptoQuant, the Bitcoin Hash Metric, a metric that uses 30-day and 60-day moving averages to measure the difficulty and financial challenges faced by miners, has signaled that the period of miner selling may be over.

When the indicator’s 30-day moving average crosses above its 60-day moving average, it signals the end of the miner sell-off as miners switch to more efficient mining equipment and re-enter the market.

Bitcoin hash belt indicators 2020-2024. Source: CryptoQuant

According to the analytics firm, this often coincides with a price bottom for scarce digital assets and presents an opportunity for investors to enter the market at a more favorable price by carefully timing their entry and buying on the dip.

Mining difficulty hits record high

Bitcoin mining difficulty (a measure of the computing power required to successfully mine a single bitcoin) hit an all-time high of 90.66 trillion on August 1. Since then, the difficulty has been adjusted down to 86.8 trillion — a slight improvement, but still well above historical difficulty levels.

Bitcoin mining difficulty. Source: CryptoQuant

As expected, the increase in difficulty eroded miners’ profit margins, causing the miner hash price (a measure of miner profitability) to fall to an all-time low of less than 36 PH/s. The miner hash price has since rebounded to around 40 PH/s, but even this level is dangerously close to all-time lows.

Bitcoin miners turn to other forms of high-performance computing services

Due to the increase in computing power and the reduction in block reward subsidies after the halving, miners' profit margins have slowly declined, which has prompted miners to convert part of their mining operations to artificial intelligence and high-performance computing services.

In July, bitcoin mining company TeraWulf announced it would diversify its business into high-performance computing and artificial intelligence data centers by building a new facility at the company’s Lake Mariner plant, providing 2 megawatts of power for the company’s first foray into data center services.