Bitcoin (BTC) mining profitability has fallen to unprecedented lows, according to a research report published by JPMorgan.
Bitcoin Mining Profitability Reaches Record Level, According to JPMorgan Reports
The report, penned by analysts Reginald Smith and Charles Pearce, reveals that Bitcoin miners earned an average of $43,600 per exahash per second (EH/s) in daily block rewards during August, the lowest rate ever recorded.
This figure is in stark contrast to the peak profitability in November 2021, when miners were earning $342,000 per EH/s, Bitcoin was trading around $60,000, and the network hashrate was 161 EH/s.
The dramatic drop in profitability is attributed to a combination of falling Bitcoin prices and rising network hashrate, which refers to the total computing power used to mine and process transactions on the Bitcoin blockchain.
The declining profitability has hurt mining stocks, which saw a 15% drop in total market value among 14 U.S. miners tracked by JPMorgan. Only three of those miners outperformed Bitcoin during the period, sending the cryptocurrency’s price down for the third month in a row.
The report also highlights that there was a 16 EH/s increase in network hashrate in August, rising to an average of 631 EH/s, just 20 EH/s below pre-split levels.
Mining difficulty, which measures how hard it is to find a new block and is closely tied to hashrate, has increased by 9% in the past month and is now 4% higher than before the halving event.
Despite the gloomy outlook, there was a brief spike in transaction fees in August, reaching 120% of the block reward at one point.
While this temporary increase in fees was somewhat positive for miners, it was not enough to offset the wider difficulties.
The report also noted that Bitcoin's annualized volatility increased from 45% in July to 62% in August, indicating increasing uncertainty and risk in the market.
As Bitcoin mining continues to face increasing difficulty, the industry is grappling with the consequences of a more competitive and less profitable environment.
*This is not investment advice.