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Bitcoin Mining Profitability Near All-Time Low – Why?
Although the Bitcoin network fourth ‘halving’ event occurred more than two months ago, its repercussions have continued to impact Bitcoin miners, making the industry’s profit margins thinner than ever.
According to Hash Rate Index, Bitcoin’s “hash price” reached an all-time low on May 1, falling to just $44.76 per petahash/second (PH/s), per day. The metric quantifies how much money a miner can expect to earn daily with a specific hash rate.
Bitcoin’s “hash rate” is the rate at which Bitcoin Miners can produce guesses to solve the mathematical problems required to mine a block of Bitcoin and earn newly printed BTC as a reward. One petahash is equivalent to one quadrillion hashes.
Participating in this game requires specialized, energy-intensive computer equipment with access to affordable electricity to keep it running. As global competition grows over time, margins for individual miners shrink, pushing all but the most efficient companies into net losses.
The day before the halving, April 19, the daily Bitcoin hash price was $92.20. What immediately followed – excluding a brief Increase in fee income driven by runes—it was a sharp drop to $57.53 on April 25.
Since then, the hash price has mostly risen and fallen along with the price of Bitcoin. With BTC back in decline this month, miner profitability is approaching its early May lows with a daily hash price of $48.29.
The lack of profitability is clearly affecting the behavior of Bitcoin miners. Bitcoin’s total hash rate has dropped 13% from its post-halving peak to just 564 exahashes (a quintillion hashes) per second (EH/s) – indicating that many miners are taking their unprofitable machines offline.
CryptoQuant analysis shows that miners have also been downloading more BTC to exchanges this month, signaling that they may need extra cash to cover their costs. For example, Marathon Digital sold 1,400 BTC in June through June 10, compared to just 390 BTC for the entire month of May.
Still, mining stocks generally don’t appear to be suffering. While performance varies from company to company, the Valkyrie Bitcoin Miners ETF (WGMI) – which provides exposure across the entire Bitcoin mining industry – is up 25% over the past month, reaching a 2024 high in June. By comparison, Bitcoin is down 11%, and major Bitcoin investor MicroStrategy (MSTR) is down 13%.
Edited by Ryan Ozawa.