Bitcoin Price Drops to Five-Year Low

Recent pullbacks observed in the Bitcoin (BTC) market continue to attract the attention of investors. According to Luxor data, the hashprice, an important income indicator for Bitcoin miners, has declined to its lowest level in five years, at 38.2 dollars PH/s. This situation significantly pressures the dollar-based earnings of miners.

Hashprice is a metric calculated based on four fundamental variables, which include the Bitcoin price, network difficulty, block reward, and transaction fees. Generally, when the Bitcoin price and transaction fees rise, hashprice increases, whereas when the network's difficulty level rises, hashprice decreases. Currently, all these variables are working against miners, negatively affecting revenues in the sector.

Additionally, while the extraction difficulty in the Bitcoin network is close to record levels, transaction fees have only remained at 25 cents, according to mempool.space data, further increasing the challenges faced by miners. On the other hand, the hashrate, which indicates the total computational power of the network, remains above 1.1 ZH/s, making the mining processes more challenging.

These challenges in the mining sector have also negatively impacted the performance of public mining companies. Although many mining companies have shifted their income models to artificial intelligence infrastructure, investors' risk appetite is decreasing. The WGMI mining ETF, managed by CoinShares, has declined by 43% from its peak level, now trading close to 41 dollars.

In light of all these developments, one of the critical points that Bitcoin investors should pay attention to is the price levels and network difficulty. Investors should remember that the Bitcoin price is currently 30% lower than its peak of 91 thousand dollars in October.