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Bitcoin Mining Profitability Rose But Bitcoin Price Dropping

As the Price of Bitcoin dropped below $57,000, marking an over 8.70% decline in just the past week, largely due to mounting bearish sentiment. Perhaps the fall of BTC price the U.S.-listed mining companies defied market trends by increasing their production of Bitcoin, despite a notable drop in the network hashrate.

This increase in mining profitability occurred despite the declining price of Bitcoin, prompting questions about the major reasons for this apparent contradiction.

Rise in Mining Profitability 

Last month in June Bitcoin’s price surged slightly by 3%, while the network’s mining power dropped by 5%. This unusual combination made Bitcoin mining more profitable than in May. Investment bank Jefferies, in a recent report, noted this trend as a recovery from the effects of the halving in April. 

Meanwhile, analyst Jonathan Petersen explained that the halving cut miners’ rewards by 50%, initially slowing Bitcoin’s supply growth but now contributing to improved mining profitability.

Mining Firms Increased BTC Mining

During June, U.S.-listed mining firms collectively increased their share of new bitcoins mined, rising to 20.8% of the total network output from 19.1% in May. This increase coincided with these companies ramping up their mining capacities even as the overall network hashrate decreased. 

Marathon Digital emerged as the top miner, producing 590 bitcoins, slightly fewer than in May, while CleanSpark saw a 7% increase, mining 445 tokens. Despite these gains, Jefferies revised its price targets downward for several mining companies in response to market conditions. 

Marathon Digital’s target was adjusted to $22 from $24, with similar reductions for Argo Blockchain ADRs and U.K.-traded shares. The bank maintained its hold rating on these companies, acknowledging their strategic shift towards high-performance computing (HPC) and artificial intelligence (AI) hosting to diversify revenue streams amidst declining bitcoin mining profitability.

Yet Bitcoin Price Dropping

Despite increased Bitcoin production by mining companies in June compared to May, which highlights its profitability, the cryptocurrency’s price has experienced a decline. This drop is largely due to selling and profit-taking activities by large investors (whales) and mid-size miners.

While there have been sales from entities like Mt. Gox and the German government, these have had a limited impact relative to the overall size of the Bitcoin market.

Furthermore, several on-chain metrics indicated oversold conditions once Bitcoin prices dropped to approximately $53,000. This situation potentially triggered a sharp rebound as traders’ unrealized profits reached lows not seen since the FTX collapse, signaling that a market correction was overdue.

Also Read: Bitcoin, Ethereum, And XRP Price Prediction: Has The Bull Rally Resumed?

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