A recent report by JPMorgan highlights the challenging situation faced by Bitcoin miners, as profitability reaches an all-time low. The aggregate market capitalization of U.S.-listed bitcoin miners tracked by the bank has declined significantly.
Mining Difficulty and Hashrate on the Rise
The data shows that mining difficulty has risen 9% from the previous month. Additionally, the network hashrate has increased for the second consecutive month. The total combined computational power used to mine and process transactions on the proof-of-work blockchain is a key metric in evaluating the competitiveness of the industry.
Profitability Hits Record Low
The report notes that Bitcoin miners earned an average of $43,600 per EH/s in daily block reward revenue in August, marking the lowest point on record. This figure is significantly lower than the peak value of $342,000 seen in November 2021, when the BTC price was $60,000 and the network hashrate was 161 EH/s.
Mining Stocks Decline as Hashrate Rises
The decline in mining stocks is attributed to the rising average price of the world’s largest cryptocurrency. The network hashrate increase is also a contributing factor, as it indicates increased competition in the industry. Despite the challenges faced by miners, there was a brief spike in transaction fees in August, which reached as high as 120% of the block reward.
Impact on Miners
The decline in mining profitability and rising network hashrate may have significant implications for miners. The report notes that only three of the miners tracked by the bank outperformed Bitcoin during the period. This could lead to a consolidation of players in the industry, as less competitive mines are forced to exit the market.
Market Capitalization and Volatility
The total market capitalization of the 14 U.S.-listed miners tracked by the bank shrank 15% month-on-month to $20 billion. Bitcoin’s annualized volatility rose to 62% in August, from 45% in July, which may impact investor confidence in the cryptocurrency.
Conclusion
The report by JPMorgan highlights the challenges faced by Bitcoin miners as profitability reaches an all-time low. The rising mining difficulty
