The aftermath of the Bitcoin network’s fourth ‘halving’ event, which occurred more than two months ago, continues to impact Bitcoin miners, squeezing their profit margins tighter than ever. Hashrate Index reported that Bitcoin’s “hash price” hit an all-time low on May 1, dropping to just $44.76 per petahash/second (PH/s) per day. This metric measures how much money a miner can expect to earn daily at a specific hash rate, with one petahash equivalent to one quadrillion hashes generated.
Participating in Bitcoin mining requires specialized and power-hungry computer equipment and access to affordable electricity to maintain operations. With increasing global competition, profit margins for individual miners are shrinking, driving all but the most efficient firms into net losses. The day before the halving on April 19, Bitcoin’s daily hash price was $92.20, followed by a steep decline to $57.53 by April 25, excluding a brief surge in fee revenue driven by Runes. The hash price has fluctuated alongside Bitcoin’s price, approaching its early May lows as BTC faces a decline this month.
The lack of profitability is evident in Bitcoin miner behavior, with the total Bitcoin hash rate dropping 13% from its post-halving peak to just 564 exahashes (EH/s) per second. This decline indicates that many miners are shutting down their unprofitable machines. Additionally, miners have been selling more BTC to exchanges this month, possibly to cover costs. For instance, Marathon Digital sold 1,400 BTC in June compared to just 390 BTC in May. Although performance varies among companies, the Valkyrie Bitcoin Miners ETF (WGMI), offering exposure across the Bitcoin mining industry, has surged 25% over the last month, reaching a 2024 high in June. In comparison, Bitcoin is down 11%, and major Bitcoin investor MicroStrategy (MSTR) is down 13%.
The bearish price environment, combined with the halving, is significantly impacting miner hashrate, which has dropped to 564 exahash, down 13% from its peak. As miners face challenges to maintain profitability, they may continue to offload BTC and struggle to cover their costs. While some miner stocks are performing well, overall, the industry is facing significant challenges as miners grapple with shrinking profit margins and increased competition in the Bitcoin mining landscape. It remains to be seen how miners will adapt to the changing dynamics of the industry and whether they can find ways to mitigate the impact of declining profitability on their operations.
