Bitcoin miners face new pressure as BTC nears key support despite $1B May gain
Bitcoin miners entered June with more than $1 billion in revenue for the first time in four months, but falling Bitcoin prices are already putting renewed pressure on mining economies.
Summary
- Bitcoin miner revenue reached $1.08 billion in May, the highest level since January.
- Hashprice is down nearly 18% on the month as Bitcoin hovers near the $65,000 support area.
- A 9% difficulty cut may ease the pressure on miners if current conditions continue.
According to data from Newhedge, miners made $1.086 billion in May, the highest monthly amount since January. Most of that revenue came from the 3.125 BTC block subsidy, which contributed about $1.079 billion, while transaction fees accounted for only a small portion of the revenue.
Even though the miners posted a strong month, conditions have weakened since the beginning of June. According to data from crypto.news, the price of Bitcoin (BTC) fell by 4.5% on June 3, touching an intraday low of $65,700. The leading crypto asset was trading flat at $65,800 at press time.
Bitcoin’s recent decline followed heightened tensions after Iran launched retaliatory strikes against US targets, prompting a broader risk-off move across financial markets.
Meanwhile, analysts at Citigroup recently asserted that strong Bitcoin ETF outflows have been a more important driver of Bitcoin weakness than Strategy’s 32 BTC selloff. In a research note, the bank identified nearly $4 billion in ETF issuance and described ETF flows as one of the strongest indicators of asset demand.
Falling Bitcoin prices reduce the profits of miners
As the price of Bitcoin trades close to the important support area of $65,000, mining profits have continued to decline.
Data from the Hashrate Index shows the daily value of one petahash produced per second of mining power fell to around $30.77, down from $37.44 last month. The decline represents a nearly 18% decline over the past 30 days and has brought the price down to levels last seen in early April.
Mining companies are already reacting to the weak economy. The network’s hashrate dropped from 1,000 exahashes per second to less than 975 EH/s as some operators slowed down or shut down inefficient machines.
Meanwhile, slow mining activity has affected block production times. The Hashrate Index data showed that blocks were being generated every 10 minutes and 59 seconds on average, well above Bitcoin’s target of 10 minutes. If current conditions continue until the next correction period around June 13, estimates suggest that the mining difficulty could drop by about 9%.
A lower difficulty level can reduce competition between miners and allow the remaining participants to earn more Bitcoin with the same amount of computing power.
Technology and network signs point to a critical period ahead
Although the expected difficulty reduction may provide temporary relief, the price of Bitcoin remains a major factor affecting the income of miners.
According to the previous analysis report of crypto.news, Bitcoin is getting close to completing the top rotating formation on the daily chart. Such a pattern is generally considered a bearish reversal formation, and a decisive break below $65,000 would reveal the next major demand area near $60,000.
On the other hand, the same analysis revealed that a recovery above $68,700 could weaken the bearish setup and create conditions for a move back to $72,000.
Work payments provided limited support. After staying below 0.6% of total block rewards for a long time, penalty income has recently improved. Recent network data shows payments accounted for about 1.16% of total block rewards in the last 24 hours.
In the meantime, miners are weighing the benefits of decompression in a market that remains under pressure from ETF exits and national uncertainty. Whether May’s strong currency performance can continue into June may depend largely on Bitcoin’s ability to hold above key support levels.
