Bitcoin Mining Faces Profitability Squeeze in August Amid Rising Hashrate

With Bitcoin prices stagnant and competition increasing, miners experienced a notable drop in profitability, and September looks to continue the trend.

Bitcoin mining has become significantly less profitable in recent months, with August marking a particularly tough period for miners. According to a report by investment bank Jefferies, the average daily revenue per exahash for miners dropped by 11.8% compared to July. The squeeze on profitability was largely driven by a combination of a 4% dip in the average Bitcoin price and a 2.7% increase in the network’s hashrate, reflecting stiffer competition among miners.

Jefferies also warned that September could present more challenges for the mining industry. As Bitcoin continues to hover below the $60,000 mark, and the network hashrate remains on an upward trajectory, miners are facing thinner margins. The rising hashrate, a key indicator of the overall competition within the network, correlates with increasing mining difficulty, further compressing profits.

However, Jefferies noted that despite these financial challenges, operational efficiency among the largest mining firms is improving. The report highlighted that the average uptime for the top 10 miners was around 83% in August, compared to just 76% a year ago. For Marathon Digital (MARA), one of the largest U.S.-listed miners, uptime reached an impressive 88%, demonstrating the company's improved ability to keep operations running smoothly despite market conditions. In comparison, Marathon had only 75% uptime in August 2022.

The report also pointed out that U.S.-listed mining companies mined a lower share of Bitcoin in August compared to the previous month. These companies represented 19.9% of the total network mining capacity, down from earlier months, indicating that while public mining firms are expanding, they may not be keeping pace with the rapid growth of the network’s overall capacity.

Among the major players, Marathon led the way, mining 673 Bitcoin in August. CleanSpark (CLSK) followed with 478 Bitcoin, while Riot Platforms (RIOT) maintained the second-largest installed hashrate in the group.

While the numbers reflect challenges in profitability, there are some silver linings. The reduction in extreme summer heat this year allowed miners to achieve better uptimes compared to last year, leading to more consistent operations. This operational resilience comes at a time when miners are searching for ways to stay competitive despite shrinking revenue streams.

Mining profitability, already at a low point in early August, has caused companies to assess their strategies moving forward. As noted by Wall Street giant JPMorgan, miners experienced profitability plunges to near all-time lows during the first two weeks of August.

With operational efficiency improving but profit margins narrowing, the Bitcoin mining industry remains in a delicate balancing act, bracing for further challenges as market conditions continue to evolve.

photo source / Blockonome