Bitcoin Mining Margin Squeeze Evaporates Revenue


Bitcoin mining operators are having a tough time during bear markets as low margins have resulted in very little revenue.

BTC price may cross $20,000 this week, but bitcoin mining operations remain indifferent.

On 26 October, Jaran Melrud from Hashrate Index reported that mining margins have evaporated over the past year. As an example, he used the gross margin of Bitmain Antminer S19j Pro, which stood at 88% in October 2021. Today, that gross margin has dropped to 38%.

However, this means that for now bitcoin mining remains profitable.

bitcoin mining crisis

According to the report, this time last year, bitcoin miners could produce 50% more BTC per Terahash per second than they are today.

This is mainly due to an increase in difficulty, a measure of competition among miners seeking to solve the next block of the network, and a decrease in hashprice.

The hashprice is a measure of the allocated market price per unit of hashing power in dollars per terahash per second per day ($/TH/s/d).

bitcoin mining btc
Source: hashrateindex.com

Larger bitcoin mining companies and pools tend to have more exhash per second capacity. The report states that one EH/s now produces 3.5 bitcoins per day, compared to 6.7 BTC per day this time last year.

This means that only miners who have doubled their hash power in the past year can earn the same amount of BTC in October 2021. Inevitably, smaller players have been pushed out of the market.

The report says that hashprice may continue to move downwards if the difficulty increases. “This looks particularly bad in the long term,” it said in reference to the bitcoin halving event of May 2024, which would see block rewards drop from 6.25 to 3.125 BTC.

Miners who want to remain competitive and profitable will need to continue expanding their hash power in order to stay afloat. This additional expense, in addition to rising energy costs, will pose a challenge for many companies.

bitcoin keeps profit

BTC price has remained on the gains made over the past few days. According to CoinGecko, the asset is up 2.6% to $20,778 in the past 24 hours.

As a result, its weekly gain increased to 8.7% as BTC reached its highest price since mid-September.

The asset is still down 70% from its all-time high and the market is still bearish. The four-month consolidation is still underway and will remain so until BTC can break above $25K.

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