Following the tumbling of the cryptocurrency market, Bitcoin has officially become unprofitable for cryptocurrency miners, according to the "Bitcoin Production Cost" indicator on TradingView, developed by the user "capriole_charles."
The indicator suggests that Bitcoin has just entered the "unprofitability" zone, which has not happened since October 2020, back when BTC was trading at around $12,000. Most likely, Bitcoin's profitability for miners stays at even lower numbers as the electricity cost used in the indicator is not relevant.
But even with data used back in 2021 and 2020, Bitcoin's profitability for traders is now in the negative zone because of the increased difficulty of the network followed by the spiking hashrate after the rapid drop during the Chinese mining crackdown.
What happens next?
While some traders and analysts were not expecting Bitcoin to drop so drastically in such a short period, the market already saw similar things happening back in 2018. The first thing that market participants should expect is the drop in hashrate and mining difficulty, as more Bitcoin producers will switch over other assets in order to stop losing money.
As Bitcoin's mining difficulty drops further, the market should expect a gradual recovery of Bitcoin production costs as miners would need less electricity for issuing a block on the blockchain.
Effect on the market
But while the drop in mining profitability largely affects miners, the market should expect a slight decrease in the selling pressure in the future as there will be less new coins issued on the network.
With the decrease in selling pressure, it should be easier for bulls to push the price of the first cryptocurrency up whenever buying power appears on the market again.