Bitcoin Mining Profitability Nearing Record Lows – What’s Causing It?
Bitcoin miners have been facing tough times post the fourth ‘halving’ event, which occurred over two months ago, impacting their profitability significantly. The hash price of Bitcoin hit an all-time low of $44.76 per petahash/second (PH/s) on May 1, as reported by Hashrate Index. This metric measures the daily earnings a miner can expect at a specific hash rate.
Bitcoin’s hash rate represents the speed at which miners can solve mathematical problems to mine a Bitcoin block and earn rewards in BTC. The competition in mining requires specialized equipment and access to cost-effective electricity, leading to shrinking margins for miners, pushing less efficient firms into losses.
The hash price fluctuated alongside Bitcoin’s price, with a recent drop to $48.29 per PH/s. The declining profitability has resulted in a 13% decrease in the total Bitcoin hash rate post-halving peak, indicating miners shutting down unprofitable operations.
Miners have been observed selling more BTC to cover costs, with Marathon Digital selling 1,400 BTC in June compared to 390 BTC in May. Despite the challenges, miner stocks, like the Valkyrie Bitcoin Miners ETF (WGMI), have seen a 25% increase over the last month, outperforming Bitcoin and other related investments.
The tough market conditions have forced miners to adapt, with many adjusting their operations to stay afloat. The impact of these changes on the mining industry remains to be seen as miners navigate the evolving landscape.
