Numerous Bitcoin Miners Halt Operations as Mining Becomes Too Costly

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Latest on-chain reports from Glassnode show that cryptocurrency investors withdrew Bitcoin (BTC) at the most aggressive rate ever recorded in June, with exchange outflows topping 151,000 BTC worth over $3 billion.

Notably, the number of active addresses has plunged by 13% since November 2021, following the commencement of the bear cycle. As of July 4, the number of active addresses hovered around 870,000.

Meanwhile, Bitcoin recorded a 1.41% difficulty adjustment drop on July 7, bringing its cumulative difficulty drop to 6.8% since May 25. For those unaware, the Bitcoin mining difficulty is used to measure the difficulty of verifying transactions on a block in the blockchain by miners. Currently, the majority of mid-level miners are on the brink of shutting down their operations.

Mining difficulty adjustments are highly correlated to changes in mining hashrate—the amount of computing power expended during mining. At press time, the Bitcoin network hashrate has dropped by roughly 3.6% since June 11.

That said, the persisting drop in mining difficulty and BTC hashrate suggests that several miners have called it quits due to challenging operational conditions and declines in miners’ revenue. Glassnode statistics show that Bitcoin miners have dropped by over 70% since their peak in 2010.

Key Bitcoin Levels to Watch — July 7

Bitcoin has entered a mildly-aggressive bullish trend as it fights to test the $21,000 mark. The recently formed bullish bias is highlighted by the trendline on my 4-hour chart on TradingView. That said, the primary cryptocurrency faces some headwinds resurfacing above the $20,500 level due to active resistance from the 100-day EMA around that level.

Regardless, BTC has shown great strength returning above the $20,000 mark this week. I foresee sustenance of this bias over the week and into the weekend after the US non-farm payroll and unemployment rate announcements tomorrow. In the meantime, we could record small corrections to the $20,000 figure to ease overbought conditions.

Meanwhile, my resistance levels are at $21,000, $22,000, and $23,000, and my key support levels are at $20,000, $19,000, and $18,000.

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