Bitcoin Miners Still Struggling as Mining Costs Soar

Although BTC prices may have recovered to levels above $20K this week, Bitcoin mining activities are still struggling.

On October 26, Hashrate Index’s Jaran Mellerud stated that mining margins had completely disappeared over the previous 12 months. He cited the Bitmain Antminer S19j Pro’s gross margin of 88% from October 2021 as an illustration. Currently, that gross margin is 38%. This does, however, imply that Bitcoin mining is still profitable right now.

Bitcoin Mining Capacity on the Low End

The paper claims that Bitcoin miners could produce 50% more BTC per terahash per second at this time last year than they could now.

This is primarily caused by the rise in difficulty, a degree of rivalry among miners vying to solve the network’s next block, and a fall in hash price. The hash price, expressed in dollars per terahash per second per day ($/TH/s/d), is a market value indicator for each unit of hashing power.

Large Bitcoin mining firms and pools have more exahashes per second available. The analysis stated that one EH/s now generates 3.5 Bitcoin per day as opposed to 6.7 BTC per day at the same time last year.

As a result, only the miners who have increased their hash power by twofold over the past year are eligible to receive the same number of BTC as they did in October 2021. In essence, the smaller competitors have been driven off the market.

According to the analysis, as the difficulty rises, the hash price will probably continue to go downward. In reference to the May 2024 Bitcoin halving event, which will reduce block rewards from 6.25 to 3.125 BTC, it said: “It looks particularly bad in the long term.”

Miners must continuously increase their hash power to stay up if they want to remain profitable and competitive. Along with rising energy prices, this additional cost will be difficult for many businesses to absorb.