Lacklustre Interest in Cryptocurrency Mining on haunting apprehensions of ROI

The surge in Bitcoin interest around the turn of the last year and subsequent unwind is also evident in the data as shown above in chart from BitInfoCharts.com, that insinuates a key flow metrics have downshifted melodramatically. 

Just for instance, daily median transaction sizes, which were typically well below $500 before 2H’17 and spiked to a peak of around $5,000 at the turn of the year, have since declined to only $160.

Furthermore, the latest decline in prices towards $3,000 per bitcoin has also seen a sharp decline in the hash rate. This suggests that prices have declined to a point where mining is becoming uneconomical for some miners, who have responded by turning their mining rigs off. What had been striking with the Bitcoin hash rate was that it peaked only recently at the end of October i.e. much later than the peak in Bitcoin prices at the end of 2017. Combined with price declines, the surge in the mining activity in the first ten months of the year, partly driven by chip manufacturers deploying miners to test their products and partly by miners adopting more efficient operations, created a collapse in mining profitability from $4/Day for 1THash/s at the end of 2017 to $0.16 currently (refer 1stchart).

Therefore, in the absence of any stabilization in prices, the least efficient miners were forced to exit mining activity abruptly. As a result, the Bitcoin hash rate collapsed from a peak of 60Ehashes/s at the end of October to around 35Ehashes/s currently (refer 2ndchart). In our mind, further declines are likely until mining profitability stabilises. Courtesy: JPM

Currency Strength Index: FxWirePro's hourly BTC spot index is flashing at -90 (which is bearish), while hourly USD spot index was at 37 (mildly bullish) at 06:07 GMT. 

For more details on the index, please refer below weblink: http://www.fxwirepro.com/currencyindex