Decrease in revenue follows the decrease in Bitcoin Mining Margin
Although BTC prices may have recovered to over $20K this week, Bitcoin mining activities are still struggling. On October 26, Hashrate Index’s Jaran Mellerud stated that mining margins had completely disappeared over the previous 12 months. He cited Bitmain Antminer S19j Pro’s gross margin of 88% as of October 2021 as an illustration. Currently, the gross margin is 38%.
The paper claims that Bitcoin miners could produce 50% more BTC per terahash per second at this time last year than they could now. The increase in difficulty, a degree of rivalry among miners fighting to solve the network’s next block, and a decrease in hash price are the main reasons for this.
A measure of market value expressed in dollars per terahash per second per day ($/TH/s/d) is called the hash price. Exahashes per second capacity is higher for the major Bitcoin miners and pools. Compared 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 doubled their hash power over the past year will be able to earn as much BTC as they earned in October 2021. Essentially, the market’s smaller players have been driven out.
According to the analysis, the hash price will probably continue to trend lower as the difficulty levels increase. Referring to the Bitcoin halving event in May 2024, which will reduce block rewards from 6.25 to 3.125 BTC, it said that it looks particularly unpleasant while looking at it in a broader, long-term perspective.
Miners must continuously increase their hash power to stay afloat if they want to remain profitable and competitive. Together with rising energy prices, this additional cost will be difficult for many businesses to absorb.
BTC prices have maintained gains recorded in recent days. According to CoinGecko, the asset has gained 2.6% over the past day to reach $20,778. As a result, BTC reached its highest price since mid-September, extending its weekly gain to 8.7%.
The markets are still negative and the asset is still down by approx. 70% from the peak it reached last November. Until BTC can break above $25K, the four-month consolidation is still active and will continue to be.
The difficulty became more of an issue after the Merge upgrade on the Ethereum network that made the network transition from proof-of-work to proof-of-stake. This caused a significant number of miners to leave the ecosystem, who eventually joined the Bitcoin network in large numbers. 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 graduating. A keen observer of detail, he shares his passion for writing alongside being a developer. His backend knowledge of blockchain helps him bring a unique perspective to his writing
