Bitcoin hashprice drops as miners face possible 30% energy tax
Jaran Mellerud said Bitcoin's mining difficulty and hashrate has soared by more than 20% in 2023 while the asset's decline has erased most of the gains it made early in the year.
Bitcoin’s (BTC) hashprice has significantly plummeted in recent weeks, dropping to its early January levels — a potential sign that the mining bull run might be over.
Hashprice measures the market value for each unit of hashing power. BTC’s price determines Hashprice’s value alongside the network difficulty and transaction fees.
With BTC’s network difficulty soaring to new all-time highs and the asset’s value dropping to a two-month low, miners could face a hard time as hashprice fell to $61.38/P.H./Day, according to hashrate index data.
What does this mean for miners?
Hashrate Index researcher Jaran Mellerud said Bitcoin’s mining difficulty and hashrate soared by over 20% in 2023 following the digital asset improved price performance.
He noted that BTC’s performance incentivized many marginal operators to turn on their machines, which increased market competition.
However, the flagship digital asset’s crash below $20,000 has erased half of the gains it made in 2023. This means miners face a 2022-like situation where BTC’s falling value made mining unprofitable.
Mellerud highlighted that BTC’s hashrate would likely increase as more miners plug in their machines in the coming months. Already, several miners have revealed intentions to increase their mining capacity by bringing more devices online.
“If hashprice is to stay at the current level, the Bitcoin price must increase considerably… The recent hashprice development shows the importance of hedging revenues.”
Miners face a 30% crypto-mining tax
U.S.-based BTC miners’ situation could be compounded by the proposed 30% taxation on all energy costs involved in cryptocurrency mining.
U.S. President Joe Biden’s 2024 budget plan included a new tax proposal on crypto mining. The government said crypto mining activities require colossal energy usage and could hurt the environment. It added that mining activities could raise electricity prices and cause uncertainties around local energy utilities.
The CEO of Satoshi Act Fund, Dennis Porter, described the proposal as “unfair and targeted discrimination.” He added that the taxation would “effectively kill Bitcoin mining in the USA.”
Public miners’ stock tank
Following the series of events, the stocks of several Bitcoin miners have tanked in the last 24 hours.
According to Google Finance data, Riot’s stock is down 12.22% to $5.53, while Hut 8 shares fell 14% to $1.75. Marathon Digital and Canaan also saw their shares decline by 11% and 7%, respectively.