The US inflation rate has been on a steady increase for the past few months. Despite the Fed’s attempt to curb inflation, the prices of goods and services keep rising.
For Bitcoin miners in the US, this has been a major challenge. The cost of running and maintaining mining facilities and powering mining gadgets will likely take a toll on miners. Interestingly, the Bitcoin hash rate has been declining since June 13th.
Bitcoin broke the $30K support around that period and hasn’t recovered since then. With the falling price of Bitcoin and the rising costs of electricity and maintenance, miners have been discouraged. The slight loss of interest from Bitcoin miners has been reflected in Bitcoin’s hashrate.
At the moment, only miners in specific regions where energy is cheap will profit from mining Bitcoin. Notably, though, most miners hardly sell off Bitcoins immediately. Miners typically hold on to the asset until the market is favorable.
How the CPI May Affect Bitcoin Miners
The Consumer price index is used to measure inflation. It gives a clue about the number of money households are willing to spend. A higher CPI signals inflation while a low CPI signals deflation.
The United States Labor Department will be reporting the Consumer Price Index tomorrow. Financial analysts already forecast a CPI value that will surpass the 8.6% annual inflation rate that was recorded last month.
Already, the surge in energy prices last month indicates that more Bitcoin miners will temporarily abandon mining. Since many crypto miners are concentrated in the United States, a decrease in mining activities will likely further affect Bitcoin’s price.
A clampdown on Bitcoin mining in China has usually affected Bitcoin’s value in the past. Right now, the United States has taken China’s position as the leading nation with Bitcoin miners. With the current challenge US miners are facing, Bitcoin’s value may further plummet in the coming weeks.
