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New data reveals that Bitcoin mining may no longer be profitable


New data has revealed that mining Bitcoin (BTC) may not be as lucrative as it used to be. Bloomberg has reported that Bitcoin mining profitability is approaching record lows not seen since the days following the collapse of FTX, posing significant challenges for those securing the network.

The data shows that the “hash price,” a metric that measures the revenue a miner earns daily for each petahash of computing power, has fallen alarmingly close to its all-time low.

This decline is notable as it occurred after Bitcoin's recent halving on April 20, which traditionally boosted the cryptocurrency's value but this time failed to counter bearish pressure from global economic uncertainties.

In particular, the term 'hashprice', coined by Luxor Technologies, reflects the 'harsh' reality that miners face post-halving. The event, which takes place every four years, reduces the block reward for miners by half, with the intention of maintaining a deflationary schedule for Bitcoin issuance.

Understanding Bitcoin Hashprice Dynamics

On April 20, immediately after the halving, BItocin's hash price spiked to $139, but this was short-lived. The increase was primarily due to higher transaction fees associated with the Rune protocol activities on Bitcoin's blockchain.

However, as these fees normalized and mining problems increased, the hash price plummeted to $57, dangerously close to the low of $55 in November 2022. This value represents the steep drop in miners' profitability, forcing them to rely more on transaction fees and the potential increase in the price of Bitcoin.

Bitcoin Mining is Nearing Record Lows.
Bitcoin Mining is Nearing Record Lows. | Source: Bloomberg

The decline in mining profitability also signals tough times ahead, especially for smaller mining operations.

According to Bloomberg, larger mining companies such as Marathon Digital Holdings Inc. and Riot Platforms Inc. proactively invested in extensive mining infrastructure and advanced equipment to address the profitability crisis.

Conversely, smaller entities may struggle to remain viable in an increasingly competitive and capital-intensive sector.

Marathon Digital's strategic expansion

In response to the challenging environment, Marathon Digital has increased its 2024 hash rate growth target, aiming to adapt to the new mining reward baseline of 3,125 BTC post-halving.

The company started the year with a hash rate capacity of 24.7 exahash per second and planned for a 46% increase. Following strategic acquisitions and increased equipment orders, Marathon expects to reach a hash rate of 50 EH/s by the end of the year.

Fred Thiel, chairman and CEO of Marathon, expressed confidence in achieving these growth targets without additional capital injection, citing the company's solid liquidity position. Thiel noted:

Given the amount of capacity we have available following our recent acquisitions and the amount of hash rate we have access to through current machine orders and options, we now believe it is possible for us to double the size of Marathon's mining operations by 2024 and reach 50%. exahash by the end of the year.

The company's advancements in mining technology and efficiency are also aimed at achieving an operational efficiency of 21 joules per terahash, further cementing its position as an industry leader.

Bitcoin (BTC) price chart on TradingView
The BTC price is moving sideways on the 4-hour chart. Source: BTC/USDT on TradingView.com

Featured image from Unsplash, chart from TradingView

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