In a recent analysis by Jefferies, a notable investment bank, it was highlighted that Bitcoin (BTC) mining profitability saw a downturn in September. This decline comes amid a persistent increase in the network’s hashrate, reflecting a complex landscape for miners.
Current Trends in Bitcoin Mining Profitability
The report, published on a Sunday, detailed a 2.6% month-over-month (MoM) drop in daily revenue per exahash for Bitcoin miners from August to September. For those unfamiliar, daily revenue per exahash is a crucial metric for gauging mining profitability. It indicates the income miners receive for each quintillion hashes of computing power they contribute to the Bitcoin network. This metric effectively demonstrates the balance between the computational effort and the rewards gained by miners as they work to solve Bitcoin’s complex cryptographic puzzles.
Despite the stagnation in the average Bitcoin price during this period, the network’s hashrate rose by 1.7%. This increase suggests a growing dedication of computational resources to secure the network, enhancing its robustness against potential attacks. However, this heightened hashrate also implies intensified competition among miners, consequently squeezing their profit margins.
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Regional Shifts in Bitcoin Mining
Interestingly, September also witnessed a regional shift in Bitcoin mining dynamics. North America-based Bitcoin mining firms expanded their share of the global BTC production, growing from 19.9% in August to 22.2% in September. This growth is attributed to improved operational conditions, such as cooler temperatures, which enhance equipment efficiency and stability.
Among the prominent players in the mining sector, Marathon Digital emerged as a leader, mining 705 BTC in September. CleanSpark followed, with a production of 403 BTC. As of the end of September 2024, Marathon Digital also boasted the highest hashrate in the industry, standing at 36.9 exahashes per second (EH/s). Riot Platforms trailed closely with a hashrate of 28.2 EH/s.
Despite the dominance of Chinese mining pools, US-based pools are rapidly gaining ground. By September 23, China and the US collectively held sway over 95% of the total Bitcoin hashrate, raising significant concerns about the centralization of the network’s mining power.
Challenges Ahead for Bitcoin Mining in October
Looking ahead, Jefferies anticipates a challenging October for the Bitcoin mining sector. The report suggests that although BTC prices have seen a modest uptick of approximately 5%, the network’s hashrate has surged by over 11%, offsetting potential gains for miners.
The backdrop to these developments includes Bitcoin’s fourth halving event in April 2024. This halving reduced mining rewards from 6.250 BTC to 3.125 BTC, significantly impacting miners’ revenue streams. Analysts predict this event could result in an annual revenue loss exceeding $10 billion for the industry.
Potential Political Influences on Bitcoin’s Future
Moreover, the report speculates on the potential implications of the upcoming US presidential elections in November. Regardless of the election outcome, there is a possibility of seeing policies that are incrementally favorable toward the cryptocurrency industry.
Meanwhile, another US-based investment firm, Bernstein, suggests that a victory for Republican candidate Donald Trump could propel Bitcoin prices to new all-time highs. However, the market awaits a clearer policy stance from Democratic candidate Kamala Harris. Currently, Bitcoin is trading at $65,073, reflecting a 4.0% increase in the past 24 hours.
