That is about 10 times too much blade exposed, There are many wrong instructions out there for setting blade depth. This is how to set the blade depth correctly.
To start with, you should set your blade depth correctly, by taking the blade holder out of the machine, and firmly cut across a piece of scrap vinyl, you will be cutting. You should only be cutting the vinyl and barely a mark on wax paper backing, Adjust blade to get there, Then put the blade holder back in machine, and use the force of the machine to get there, same results, only cutting the vinyl and barely a mark in wax paper backing. You should just barely see and feel your blade tip out of the blade holder. You only cut with the very tip of the blade.