According to a recent report from Jefferies, Bitcoin (BTC) mining profitability dropped in September while the network’s hashrate continued to rise.
Bitcoin mining profitability in a downward trend
In a report published on Sunday, investment bank Jefferies said that the profitability of Bitcoin mining declined in September compared to August. In particular, daily revenue per exahash decreased by 2.6% month-on-month (MoM).
For the uninitiated, daily exahash revenue refers to the amount of BTC miners earn for each exahash – 1 quintillion hashes – of computing power they contribute to the network every day.
This metric helps measure the profitability of mining operations by showing how much revenue miners generate based on the total power they devote to solving Bitcoin’s cryptographic problems.
Over the same period, while the average BTC price remained stable, the network hashrate increased by 1.7%, indicating that more computing power is being devoted to securing the network, making it more resistant to attacks. However, rising hashrate also reduces miners’ profit margins due to increased mining activity and competition.
Notably, North American-based Bitcoin mining companies increased their share of total BTC production, growing from 19.9% in August to 22.2% in September. The report attributed this raise to these companies operating longer hours due to lower overall temperatures.
Among Bitcoin mining companies, Marathon Digital mined 705 BTC, followed by CleanSpark, which mined 403 BTC. Marathon also leads the industry in the highest hashrate at 36.9 exahash per second (EH/s) as of September 30, 2024. It is closely followed by Riot Platforms at 28.2 EH/s.
Although Chinese mining companies still control the majority of the BTC hashrate, US mining companies are quickly catching up. As of September 23, China and the United States combined controlled 95% of the entire Bitcoin hashrate, which raises stern concerns about the network’s decentralization narrative.
October promises to be a month full of challenges
In the report, Jefferies stated that October is likely to be a more arduous month for the BTC mining sector. The report reads:
October will currently be a more arduous month as BTC prices will only raise by around 5% while the network hashrate will raise by +11% more than offset this raise.
In April 2024, Bitcoin underwent its fourth halving, which effectively cut mining rewards in half, from 6,250 BTC to 3,125 BTC. According to analysts, halving yes expected result in more than $10 billion in annual business revenue loss.
The report states that regardless of who wins the upcoming US presidential election in November, there is a risk that we will see “increasingly favorable policies towards the industry.”
Another US-based investment company, Bernstein thinks that the victory of Republican candidate Donald Trump may push the BTC price to up-to-date historic highs (ATH). At the same time, the market demands a clearer position from Democratic candidate Kamala Harris. At press time, BTC is trading at $65,073, up 4.0% in the last 24 hours.
Featured image from Unsplash.com, charts from Blockchain.com and TradingView.com
