Bitcoin miners faced another challenging month in October, as both revenue and profit declined for the fourth consecutive month, according to a recent research report by JPMorgan. The bank’s analysis paints a picture of increasing competition and shrinking margins in the Bitcoin mining industry.
JPMorgan estimates that daily Bitcoin mining revenue fell by 1% in October, averaging $41,800 per exahash per second (EH/s) of hashrate. Hashrate, a measure of the total computational power dedicated to mining, serves as an indicator of industry competition and mining difficulty. The decline in revenue suggests a more competitive landscape for miners.
Profitability also suffered, with daily gross profit from block rewards dropping by 2% to its lowest level “on recent record,” according to the bank. This continued decline in profitability raises concerns about the sustainability of smaller mining operations.
However, there was a glimmer of hope amidst the downturn. Transaction fees, which supplement block rewards, surged towards the end of October, reaching as high as 60% of the block reward. This spike provided some relief to miners, boosting the hashprice, a measure of daily mining revenue.
Despite the challenging financial environment, the Bitcoin network’s average monthly hashrate reached a record high of 702 EH/s in October, a significant 9% increase from the previous month. Furthermore, the seven-day moving average hashrate at the end of October stood even higher at 748 EH/s, representing an 18% increase from the end of September and a substantial 62% year-on-year growth. This surge in hashrate indicates continued investment and expansion in the mining sector, despite the declining profitability.
Interestingly, the total market capitalization of the 14 publicly listed Bitcoin mining companies tracked by JPMorgan rose by 14% to $23.9 billion in October. This growth was primarily driven by companies with exposure to high-performance computing (HPC), suggesting that investors may be favoring miners with diversified operations and advanced technological capabilities.
