According to a recent JPMorgan research report, Bitcoin (BTC) mining profits took a significant hit during the first half of September as the price of Bitcoin struggled to stay above $60,000. This marks a critical moment for the Bitcoin mining industry, where increased competition and soaring hashrate levels are putting immense pressure on profitability.
Hashrate Increases, Profitability Declines
JPMorgan analysts have pointed out that Bitcoin’s hashrate—a measure of the total computational power used to mine and validate transactions—rose by 4% this month, reaching levels last seen before the most recent halving event. While a rising hashrate indicates greater network security, it also signals stiffer competition among miners.
However, the increase in hashrate has been accompanied by a sharp drop in hash price (the daily revenue miners earn), which has declined by 2% so far and is now sitting 50% below pre-halving levels. This stark decline in revenue per terahash is causing a squeeze on mining profitability, making it harder for miners to stay afloat, despite the network’s growing power.
U.S. Miners Hold Record Share of Global Hashrate
Despite these challenges, U.S.-listed Bitcoin mining companies continue to expand their dominance. JPMorgan reports that U.S.-based miners now control a record 26.7% of the global network’s hashrate, marking the fifth consecutive month of growth. This rise comes even as overall market conditions remain difficult for miners around the world.
While the global Bitcoin mining industry struggles, some U.S. companies are standing out. Hut 8 (HUT) saw an 11% gain in its performance during September, while CleanSpark (CLSK) reported a 12% decline, marking it as one of the worst-performing companies in the sector.
Profitability Pressures Expected to Continue
JPMorgan examiners, Reginald Smith and Charles Pearce, too note that declining hash costs combined with regular power blackouts might moderate down hashrate development in the brief term. Additionally, other financial institutions, including Jefferies, warn that Bitcoin miners may face even more profitability challenges in the coming months, with profit margins continuing to shrink as costs rise.
Despite these challenges, JPMorgan highlighted that miners are still trading slightly above their four-year block reward opportunity, averaging 1.6x above expectations. However, without an improvement in Bitcoin’s price or a reduction in hashrate growth, the outlook for mining profitability remains uncertain.
Conclusion
As the Bitcoin mining landscape becomes more competitive, rising costs and declining profitability are posing significant challenges for the sector. The future of Bitcoin mining profitability may depend on upcoming regulatory developments, market shifts, and technological advancements in mining efficiency.
