Bitcoin mining profitability is near an all-time low
Over two months have passed since the Bitcoin network experienced its fourth 'halving' event, yet its aftermath is still profoundly shaping the landscape for Bitcoin miners by significantly reducing their profit margins.
As per the data from Hashrate Index, the "hash price" of Bitcoin plummeted to a record low on May 1, touching merely $44.76 per petahash per second (PH/s) for each day. This figure represents the daily revenue a miner can anticipate based on their hashing power.
The "hash rate" of Bitcoin reflects the computational speed at which the network's miners can propose solutions for the cryptographic puzzles necessary to add a new block to the blockchain, thereby earning newly minted BTC. To put it into perspective, a petahash equals a thousand trillion hashes.
This increasingly competitive field demands specialized, energy-intensive hardware along with access to inexpensive electricity to keep the operations going. As competition escalates globally, the profit margins for individual miners are squeezed, driving those who cannot operate efficiently enough towards operational losses.
On the eve of the halving on April 19, the daily hash price for Bitcoin stood at $92.20. Then, barring a temporary surge in fees due to a Runes-related influx, a significant drop to $57.53 was observed by April 25.
Following this, variations in hash price have closely mirrored the fluctuations in Bitcoin's own value. Now, with Bitcoin's price on a downward trajectory this month, mining profitability is nearing the lows seen in early May, with the daily hash price receding to $48.29.
These diminishing returns are evidently steering Bitcoin miners' actions. The total Bitcoin hash rate has seen a 13% reduction from its zenith post-halving, settling at just 564 exahashes (or one quintillion hashes) per second (EH/s)—a clear indicator that numerous miners are decommissioning their now-unprofitable hardware.
Analyses from CryptoQuant illustrate that miners are currently transferring an increased volume of BTC to exchanges, likely in search of liquid assets to suffice operational expenses. For instance, by June 10, Marathon Digital had liquidated 1,400 BTC in June, a stark increase from the 390 BTC sold throughout May.
Despite these challenges, the collective performance of miner stocks hasn't taken a hit. While outcomes vary from one entity to another, the Valkyrie Bitcoin Miners ETF (WGMI)—which offers a comprehensive view of the Bitcoin mining sector—is observing a 25% rise over the past month, marking a new high in June 2024. In contrast, Bitcoin itself has declined by 11%, and the prominent Bitcoin backer MicroStrategy (MSTR) has seen a 13% downturn.
