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The below is an excerpt from a recent edition of the Deep Dive, Bitcoin Magazine's premium markets newsletter. To be among the first to receive these insights and other on-chain bitcoin market analysis straight to your inbox, subscribe now.

$30,000 Support Fails To Hold 

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The ugly price action has continued for bitcoin, as the $30,000 support was broken late Sunday night. The next Daily Dive will focus on some of the probable factors at play and potential scenarios for the bitcoin market, while this letter will highlight the latest trends around bitcoin miners in particular.

Bitcoin Mining Difficulty

Bitcoin mining difficulty adjusted downward on Sunday for the fourth time in a row. The -4.81% adjustment is following the historic -27.94% adjustment in the prior epoch that was caused by the record mining migration out of mainland China.

The latest adjustment is another positive sign for entities who were able to keep their operations running, as the adjustments over the past two months have reduced difficulty by 45.5% from the all-time high, significantly increasing BTC denominated revenue for mining operations. 

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Hash Rate And Mining Revenue

With the four straight difficulty adjustments, hash rate and miner profitability have begun to rebound.

The two metrics (seven-day moving averages) both bottomed on July 3, with miners now pulling in over 33% more today than in U.S. dollar revenue than they were at the bottom. Miner profitability, hash rate, and difficulty are all important to keep an eye on because — as has been previously covered in the Deep Dive — bitcoin is a commodity (among many other things). 

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There is a production cost to bitcoin, and this production cost is driven by demand to hold the asset, and the inelastic supply of the asset that cannot rise as a function of demand like all other commodities.

What can rise is hash rate and subsequently; difficulty. Conversely, the opposite has happened over the past couple of months, as the fall in hash rate has significantly lowered the (estimated) production cost of bitcoin.

Below is the price of bitcoin, the energy value and the hash rate.

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A result of the increased profitability is that miners have accumulated 3,785 bitcoin over the last month, and this trend can be expected to continue as long as the production cost is this far below the price of bitcoin. Despite recent price action, this is a bullish development for not only the mining industry but also the market broadly.

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