Main Points :
- Bitcoin mining profitability declined significantly in August 2024, compared to July.
- Hashrate of the Bitcoin network continues to rise, increasing mining difficulty.
- Despite profitability challenges, mining efficiency improved, with higher operational uptime for major miners.
- Marathon Digital led Bitcoin production, followed by CleanSpark, despite lower overall mining shares.
- JPMorgan also highlighted a decline in mining profitability in early August 2024.
Overview of Bitcoin Mining in August
The Bitcoin mining industry faced a challenging month in August 2024, with profitability experiencing a notable decline. According to a report by investment bank Jefferies, Bitcoin miners earned significantly less revenue than in July. As Bitcoin’s price remained below $60,000, miners found themselves navigating increasing network difficulty, reflected in a rising hash rate. Although profitability has taken a downturn, operational efficiency showed improvement, indicating potential long-term benefits for the mining sector.
Profitability Decline Amid Rising Hashrate
Jefferies’ report highlights a stark contrast between July and August 2024 for Bitcoin miners. During this period, Bitcoin’s average price dropped by over 4%, while the network’s average hash rate increased by approximately 2.7%. The rising hash rate is a direct reflection of the growing competition within the mining industry, as more miners vie for block rewards, resulting in greater computational power being applied to the network.
This increase in hash rate led to an 11.8% drop in average daily revenue per exahash (EH) for miners compared to the previous month. As profitability shrinks, Jefferies analysts Jonathan Petersen and Joe Dickstein predict that September will likely continue to be a tough month for Bitcoin miners, with the price still below $60,000 and the hash rate continuing to climb.
Operational Efficiency Improvement
Despite the drop in profitability, Jefferies points out that operational efficiency for miners improved in August. Major miners, including Marathon Digital, saw their uptime increase, thanks in part to fewer extreme weather events such as heatwaves, which typically disrupt mining operations. Marathon’s operational efficiency jumped to 88% in August, a significant improvement from the 75% recorded in the same month last year.
This trend was echoed across the top 10 Bitcoin mining companies, whose average operational efficiency increased to 83%, up from 76% in August 2023 and 79% in August 2022. This operational resilience, despite the economic challenges, shows that miners are adapting and finding ways to optimize their output even when profitability is squeezed.
Mining Companies’ Performance
Publicly listed Bitcoin mining companies faced headwinds in August, as their share of new Bitcoin mined dropped compared to July. Despite this decline, they still contributed 19.9% of the total network hash rate. The decrease in share was attributed to publicly traded mining companies adding new capacity at a slower rate than the overall increase in network difficulty.
Marathon Digital led the pack, mining 673 Bitcoins in August, more than any other mining company. CleanSpark followed with 478 Bitcoins. Jefferies noted that Marathon’s installed hash rate remains the largest in the industry, with Riot Platforms ranking second.
Profitability at Historic Lows
The Jefferies report isn’t the only one signaling trouble for Bitcoin miners. JPMorgan released a report earlier in August stating that mining profitability had dropped to historically low levels during the first two weeks of the month. This sharp decline is attributed to the combination of rising hash rates, stagnant Bitcoin prices, and the increasing cost of energy and equipment necessary for mining operations.
Future Outlook
Looking ahead, the future of Bitcoin mining remains uncertain. As competition increases and network difficulty continues to rise, miners will be forced to innovate or consolidate to maintain profitability. The improvement in operational efficiency seen in August, particularly with companies like Marathon Digital, may provide some optimism for the sector, but profitability will depend heavily on external factors such as Bitcoin’s market price and global economic conditions.
Despite the short-term challenges, the growing hash rate signifies a strong belief in Bitcoin’s long-term viability, with miners continuing to invest heavily in new hardware and operational improvements.
August 2024 proved to be a tough month for Bitcoin miners as profitability sharply declined, but operational efficiency improvements among the top players offered a silver lining. The report by Jefferies underscores the ongoing challenges in the mining sector, with increasing network difficulty and stagnant Bitcoin prices weighing heavily on profitability. However, miners are showing resilience through enhanced efficiency and sustained operational uptime. As the sector moves into September, these efficiency gains may prove crucial in helping miners weather the storm until profitability rebounds.
