Bitcoin Miners Under Pressure as BTC Price Hovers Close to Production Cost Baseline

On-chain data suggests that Bitcoin miners would be under pressure right now as the price is quite close to the baseline for these chain validators.

Bitcoin price has performed well over the past couple of weeks, finally managing to break above the key resistance at $60,000. However, the flagship digital asset seems to have stalled at this level, and on-chain data suggests that Bitcoin miners could be feeling the heat right now.

Bitcoin price has finally managed to break the key resistance at the $60,000 level. However, the flagship digital asset has stalled at this level, and on-chain data suggests that Bitcoin miners can already feel the pressure.

Bitcoin miner production cost now at $57,200 as per Difficulty Regression Model

In a new analysis post on X, analyst Checkmate covered the current state of Bitcoin miners. The analyst used the Difficulty Regression Model, which attempts to gauge the average production cost of these chain validators to mine a single asset token.

This model uses the network's difficulty, which essentially measures how hard the miners would find it to be able to discover new blocks. The BTC blockchain adjusts the difficulty automatically once every two weeks based on how quickly the miners have been able to perform their tasks since the last adjustment.

This concept is built into BTC's code so that the block production rate (the amount of time it takes for the miners to find the next block) stays around a constant value.

But why did Satoshi feel the need to do this? It's because miners get block subsidies as a reward for solving blocks, which also happens to be the only way to mint more of the asset.

As the total computing power of the miners increases (what's also known as the hashrate), they naturally become better at their task and produce blocks faster. If this growth is left unchecked, these validators will keep pumping out blocks faster and faster, leading to the asset's supply exploding.

Supply-demand dynamics dictate that such an explosion would tank the asset's value. The Bitcoin creator realized this and programmed the Difficulty feature into the blockchain.

Now, whenever miners increase their hashrate, the network also increases the difficulty by about the same proportion in the next adjustment, thus counteracting the speed increase miners could leverage the extra power for.

Coming back to the Difficulty Regression Model, this indicator uses the Difficulty to calculate the production cost of BTC since it essentially encapsulates everything related to the miners due to its relation to the hashrate.

Here is how the average cost of producing 1 BTC has changed over the past few years, according to this model.

In a new analysis post on X, analyst Checkmate covered the current state of Bitcoin miners. The analyst pointed to a difficulty regression model that attempts to measure the average cost of generating these on-chain validators to mine a single asset token.

This model uses network difficulty, which basically measures how hard miners work to find new blocks. The BTC blockchain automatically adjusts the difficulty once every two weeks based on which miners have been able to complete their tasks since the last adjustment.

This concept is built into the BTC code so that the block generation rate (the amount of time it takes miners to find the next block) stays around a constant value.

But why did Satoshi feel the need to do this? This is because miners receive block subsidies as a reward for solving blocks, which happens to be the only way to multiply assets.

As miners' total computing power (also known as hash rate) increases, they naturally become better at their work and generate blocks faster. If this growth goes unchecked, these validators will pump blocks faster and faster, eventually leading to an asset supply explosion.

Supply and demand dynamics dictate that such an explosion lowers asset value. The creator of Bitcoin realized this and programmed a hard feature into the blockchain.

Now, whenever the miners increase their hash rate, the network will increase the difficulty by almost the same proportion in the next adjustment, thus speeding up the miners and the miners can use the extra power for it.

Going back to the difficulty regression model, this indicator uses difficulty to calculate the cost of producing BTC because it basically includes everything that concerns miners as it relates to the hash rate.

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