According to a recent report from Jefferies, Bitcoin (BTC) profitability fell in September, while the network’s hashrate continued to rise.
Bitcoin Mining Profitability in Downtrend
In a report published Sunday, investment bank Jefferies outlined that Bitcoin mining profitability plummeted in September compared to August. Specifically, daily revenue per exahash decreased by 2.6% month-on-month (MoM).
For the uninitiated, daily revenue per exahash refers to the amount of BTC miners earn for each exahash – 1 quintillion hashes – of computing power they contribute to the network daily.
The metric helps measure the profitability of mining operations by showing how much revenue miners generate based on the collective power they devote to solving Bitcoin’s cryptographic challenges.
During the same period, while the average BTC price stagnated, the network’s hashrate increased by 1.7%, indicating that more computing power is being spent on 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 America-based Bitcoin mining companies have increased their share of total BTC production, from 19.9% in August to 22.2% in September. The report attributes the increase to better uptime for these companies due to lower overall temperatures.
Among Bitcoin mining companies, Marathon Digital has mined 705 BTC, followed by CleanSpark, which has mined 403 BTC. Marathon also leads the industry with the highest hashrate of 36.9 exahashes per second (EH/s) as of September 30, 2024. Riot Platforms follows closely with 28.2 EH/s.
While Chinese mining pools still control most of the BTC hashrate, US-based mining pools are quickly catching up. From September 23, China and the US will be joint checked 95% of all Bitcoin hashrate, raising serious concerns about the network’s decentralization narrative.
October is about to be a challenging month
In the report, Jefferies stated that October could likely be a tougher month for the BTC mining sector. The report reads:
October is currently shaping up to be a tougher month, with BTC prices only rising about 5%, while the network hashrate +11% more than offsets that growth.
In April 2024, Bitcoin underwent its fourth halving, effectively cutting mining rewards in half, from 6,250 BTC to 3,125 BTC. According to analysts, there has been a halving expected This would lead to an annual loss of revenue for companies valued at more than $10 billion.
The report concludes that regardless of who wins the upcoming US presidential election in November, there are chances of “increasingly more favorable policies towards the industry.”
In contrast, another American investment firm, Bernstein believes that a victory for Republican candidate Donald Trump could push the BTC price to new all-time highs (ATH). At the same time, the market is demanding a clearer position from Democratic candidate Kamala Harris. BTC is trading at $65,073 at the time of writing, up 4.0% in the last 24 hours.
Featured image from Unsplash.com, charts from Blockchain.com and TradingView.com