Bitcoin Miners Face Record Low Profits
Bitcoin miners are struggling as profits hit a record low due to recent halving, rising competition, and increasing energy costs.
Bitcoin mining companies are struggling as profitability hits a record low, according to a new report. Analysts from JPMorgan Chase revealed that miners’ daily block reward gross profit dropped by 6% in September, marking the third consecutive month of declining revenue. This downturn continues despite a slight increase in Bitcoin’s average prices.
The main factor behind the revenue decline is the recent Bitcoin Halving, which occurred in April. This event, scheduled every four years, reduces the rewards miners receive by 50%, impacting profitability and limiting the supply of new BTC. Analysts estimate that this halving could result in a $10 billion annual revenue loss for mining companies.
Adding to the pressure, increased competition and rising energy costs are squeezing miners even further. Major operators entering the US market have intensified the competition, making it harder for smaller players to secure profits. More participants in the mining space mean higher computing power and a lower chance of earning rewards.
Bitcoin mining is a capital-intensive process, requiring significant investment in hardware and energy to validate transactions. The impact of these challenges is clear in the stock performance of leading US-listed companies like Marathon Digital and Riot Platforms, which have seen their shares drop by over 30% and 50% this year.
Market sentiment has fluctuated amid recent geopolitical events, such as tensions in the Middle East, which have led some investors to seek safer assets like gold. Despite brief price surges driven by the Federal Reserve’s rate cut decision in September, the overall trend has been negative for Bitcoin miners. With the halving cutting into profits and external factors increasing costs, the outlook remains challenging for mining companies.
