Bitcoin hashrate rises as investor activity declines

Glassnode’s recent report highlights a significant increase in Bitcoin’s (CRYPTO:BTC) hashrate, even as miners face challenges from declining revenues.

At the same time, investor engagement with exchanges and trading volumes is decreasing, signaling a reduced appetite for speculative activity in the crypto market.

Bitcoin miners have continued to show resilience, maintaining high levels of activity despite the market conditions.

The report notes that the Bitcoin hashrate has reached an all-time high (ATH), even as miner revenues have dropped by 22% since March.

Miners are continuing to install new hardware, pushing the industry’s competitiveness to unprecedented levels.

While block subsidy revenue remains robust at $824 million, transaction fee revenue has decreased to $20 million, driven by reduced demand for onchain transactions.

However, investor engagement appears to be waning.

Glassnode observed that onchain exchange-related volumes are contracting, indicating diminishing interest from investors in short-term trading.

Additionally, both Bitcoin and Ethereum (CRYPTO:ETH) exchange-traded funds (ETFs) are experiencing notable capital outflows, further signaling a slowdown in market activity.

"Starting with the bitcoin ETFs, we can see that net capital flows in USD have softened since Aug 2024 and are now reporting an outflow of $107M/week," the report states.

The report also points out a divergence in demand between Bitcoin and Ethereum ETFs.

"On aggregate, the ethereum ETFs have experienced a total outflow of $-13.1M. This highlights a disparity in the magnitude of demand between [bitcoin and ether], at least within the context of current market conditions," Glassnode added.

Miners, who have traditionally sold large portions of their block rewards to cover operational costs, are now opting to retain more of their newly mined Bitcoin.

This strategic shift reflects miners' anticipation of future price increases.

However, Glassnode warns that the rising difficulty of mining, combined with increasing energy costs, is adding pressure on miner profitability.

"With the hashrate cruising at record highs and revenues dwindling, there is potential for sell-side pressure if market conditions worsen," the report cautions.