Bitcoin Miner Profits at Record Low

Bitcoin miners' profits fell to an all-time low in September, according to JPMorgan.

“Compared to August, daily Bitcoin mining block reward profits fell 6%, the lowest on record,” JPMorgan analysts Reginald Smith and Charles Pearce wrote in a report on Oct. 1. “Bitcoin mining revenue and daily gross profit declined for the third consecutive month, despite a slight increase in the average Bitcoin price.”

Specifically, the hashrate (the computing power of the blockchain mining system) index increased for three consecutive months to 643 exahashes per second (EH/s), which also means the difficulty increased. The group estimates that miners earned an average of nearly $42,100 per EH/s in daily block rewards in September, the lowest in many years, thereby reducing profits.

Bitcoin miner revenue from January 2021 to September 2024. Source: JPMorgan

There are now about 14 major Bitcoin mining companies listed in the US, with a combined market capitalization of more than $20 billion. The sector has seen strong growth in recent years due to the rise in Bitcoin prices, but has declined in the past three years due to the decline in the value of the cryptocurrency and increased competition from large-scale mining operations in the US. Shares of Mara Holdings and Riot Platforms, two of the largest Bitcoin mining companies in the US, have fallen 36% and 54%, respectively, this year.

Previously, data released by blockchain market research firm CryptoQuant on August 19 showed that the Hash Ribbons index - reflecting the difficulty and financial challenges for Bitcoin miners - had a higher moving average in the 30 days up to August 11 than in the previous two months. CoinTelegraph commented that this is an unfavorable parameter for miners, signaling that their profits continue to decline.

A Bitcoin mining rig from Hut8 Mining. Photo: Miner Mag

Since the fourth Bitcoin halving , miner earnings have plummeted, as evidenced by the profitability index. Miners’ daily revenue dropped 63% in the two months following the halving due to lower rewards and higher transaction fees. Meanwhile, the need for upgrades to mining rigs has put miners on the brink of “ giving up and turning off the machine .”

“Miners’ total daily revenue was $79 million in early March, but is now down to $29 million. Transaction fees also accounted for just 3.2% of total daily revenue, the lowest since April 8,” CryptoQuant said in a report in early July.

To curb inflation caused by too many people mining the cryptocurrency, Nakamoto Satoshi, the father of Bitcoin, added a piece of code that cut the reward for miners in half every 210,000 blocks mined. This algorithm is called Bitcoin halving and occurs on average every four years. In the first halving, the reward was reduced from 50 to 25 Bitcoins per block. The fourth halving is scheduled for April 20 and when it happens, miners will receive only 3,125 Bitcoins for mining a new block.

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