Bitcoin Mining Firms Transitioning to Alternative Coins Due to Increasing Operational Expenses, Notes CryptoQuant CEO

Bitcoin miners are taking measures to mitigate the impact of the recent price decline by diversifying their mining activities to include other cryptocurrencies, as per the insights shared by CryptoQuant’s CEO.

Ki Young Ju noted that the hashprice of Bitcoin has reached an unprecedented low, potentially leading to a reduction in mining investments and prompting mining firms to explore alternative, more cost-effective proof-of-work (PoW) coins for mining operations in the interim.

Hashprice, which represents the anticipated value of 1 TH/s of hashing power per day, serves as a metric to estimate a miner’s potential earnings based on a specific amount of hashrate.

Ju highlighted, “Bitcoin hashprice hit an all-time low. Many mining companies slowed mining rig investments, with some switching to other PoW coins to hedge against market uncertainty. This doesn’t signal the end of the cycle. They are not pessimistic in the long term; they are simply hedging their positions and awaiting the recovery of buy-side liquidity, in my view.”

Despite this, Ju concurred that this trend indicates a capitulation among miners, a common precursor to a bullish phase for Bitcoin.

As of the latest update, Bitcoin is currently valued at $60,681.

In a recent statement, Ju indicated that Ethereum’s Market Value to Realized Value (MVRV) indicator is suggesting the onset of an altseason.

The MVRV indicator, utilized to evaluate whether a specific crypto asset is undervalued or overvalued, calculates the ratio of a crypto asset’s market capitalization to its realized capitalization (the total value of all ETH based on their purchase prices).

“We are entering the early stages of the altcoin season. ETH MVRV is increasing at a faster pace than Bitcoin (BTC) MVRV, indicating a growing interest in the ETH market relative to its on-chain fundamentals. Given the current ETF scenario, this could potentially be a season dominated by ETH alone. Historically, when ETH experiences a surge, other altcoins tend to follow suit.”

At present, ETH is trading at $3,360.

The observations made by Ju shed light on the evolving dynamics within the crypto mining sector and the potential implications for both Bitcoin and Ethereum in the current market environment.