Despite the rising price of BTC over the past year, the miners have struggled to remain profitable while securing the world’s largest blockchain. A crypto expert has shared insights into the Bitcoin mining industry over the past few months in the current cycle.
Wedson attributed the Bitcoin mining industry’s struggles partly to the high price of BTC, which surged by almost 100% since the last halving event. The premier cryptocurrency is believed to be highly valued compared to what the blockchain validators earned during the peak years of 2017 and 2021.
According to the Alphractal founder, the combination of rising hash rate and low on-chain volume has added to the competition for winning blocks on the BTC networks. These less-than-optimal conditions create extra pressure, forcing miners to invest in expensive modern equipment to compete.
To put things into an on-chain perspective, Wedson highlighted the Mining Equilibrium Index (MEI), which measures current mining profitability against historical averages (a ratio of short-term to long-term mining revenue efficiency). This metric works by comparing the 30-day average revenue per hash to the 365-day average.
The Alphractal founder shared that the MEI metric staying above 1 signals above-average mining conditions. Meanwhile, when this index falls beneath 0.5, it suggests a struggling mining industry, which could be linked to capitulation or hashrate adjustments.
Wedson revealed that the Mining Equilibrium Index currently stands around 1.06, which is well above the stressed mining levels where miners can no longer sustain operations. However, the on-chain data expert noted that the current level is also beneath the highs of 2.5 seen between 2017 and 2021.
As of this writing, the price of BTC stands at around $110,700, reflecting no significant movement in the past day. However, the market leader seems to be making a recovery of some sort, jumping by nearly 3% in the past seven days.
