Decline in Revenue Follows the Reduction in Bitcoin Mining Margin

Although BTC prices may have recovered to above $20K this week, Bitcoin mining activities are still struggling. On October 26, Hashrate Index’s Jaran Mellerud stated that mining margins had completely disappeared over the previous 12 months. He cited the Bitmain Antminer S19j Pro’s gross margin of 88% from October 2021 as an illustration. Currently, that gross margin is 38%.

The paper claims that Bitcoin miners could produce 50% more BTC per terahash per second at this time last year than they could now. The rise in difficulty, a degree of rivalry among miners vying to solve the network’s next block, and a decline in hashprice are the main causes of this.

A measure of market value expressed in dollars per terahash per second per day ($/TH/s/d) is termed as the hashprice. Exahashes per second capacity is higher for the big Bitcoin mining firms and pools. In comparison to 6.7 BTC per day at this time last year, one EH/s currently generates 3.5 BTC per day, according to the report.

Only miners who have increased their hash power by twofold during the past year will be able to earn the same amount of BTC that they earned in October 2021. In essence, the market’s smaller participants have been driven out.

According to the analysis, hashprice will probably continue to trend lower as difficulty levels rise. In reference to the May 2024 Bitcoin halving event, which will reduce block rewards from 6.25 to 3.125 BTC, it said that it looks specifically unpleasant while looking at it in a broader perspective for the long term.

Miners must continuously increase their hash power to stay up if they want to remain profitable and competitive. Along with rising energy prices, this additional cost will be difficult for many businesses to absorb.

Prices for BTC have maintained gains recorded over the last few days. According to CoinGecko, the asset has increased by 2.6% during the last day to reach $20,778. As a result, BTC touched its highest price since mid-September, increasing its weekly gain to 8.7%.

Markets are still negative and the asset is still down by about 70% from its peak it attained in November last year. Until BTC can break over $25K, the four-month consolidation is still active and will continue to be so.

The difficulty became more of an issue after the Merge upgrade on Ethereum network which made the network transition from proof–of-work to proof-of–stakes. This caused a significant number of miners to leave the ecosystem, who eventually joined the Bitcoin network in a large amount. This also played a crucial role in increasing the mining difficulty for miners.

Andrew is a blockchain developer who developed his interest in cryptocurrencies while his post-graduation. He is a keen observer of details and shares his passion for writing along with being a developer. His backend knowledge about blockchain helps him give a unique perspective to his writing