The digital Mining industry has been experiencing some relief in recent days, which is reflected in a barely perceptible rise in the hash price. However, overall, August was a month to forget for Bitcoin miners, who suffered a collapse in their income.
This makes it clear that the effects of the halving are still wreaking havoc on the industry. This reality is palpable mainly among small and medium-sized companies dedicated to the extraction of coins. On the other hand, the performance of the BTC price is not of much help in stabilizing the sector either.
Bitcoin miners’ profits fell to $851 million
As mentioned at the beginning, there was positive news for Bitcoin miners in the last few days of August. However, the month as a whole was the worst of 2024 in terms of revenue. The strong capitulation, despite some relaxation, continues with remarkable strength. In addition, the low network activity led to low commission income as well.
According to data from The Block, revenue in terms of transaction fees was $20.76 million. Meanwhile, revenue from block processing was $830.6 million.
In that approximate period, the majority of revenues were captured by two dominant pools: F2Pool and Foundry USA. Between them, they processed 54.14% of all revenues in the sector during August. For analysts, this concentration of mining activity in two pools constitutes a latent danger of centralization.
In any case, Bitcoin miners’ revenue in August suffered one of the most significant drops in recent years. It is the worst month of revenue so far in 2024.
Bitcoin miners’ revenue in August was the worst so far in 2024. Source: The Block
Poor BTC performance does not help the mining business
There are several reasons for the poor state of the mining business during the month of August. Apart from the already mentioned halving attacks, which are remarkably persistent, there is the poor performance of the Bitcoin price. The largest Cryptocurrency continued on an unattractive path for investors.
Volatility for the token was the norm during August. As shown by the CoinMarketCap portal, between August 2 and September 2, BTC’s performance is almost -7%. As shown in the chart below, for most of the month, the exchange value of the digital currency was below $60,000.
Despite specific periods (4 days) above $63,000, the constant was to remain below 60K. This price is insufficient to maintain an acceptable profitability among mining companies. The latter, considering the average cost of production of a BTC, which exceeds $74,300 dollars, according to the MacroMicro portal.
This differential becomes one of the major obstacles facing the productivity of companies. Another element to highlight is that the hashprice remained slightly positive, but still far from the $0.047 per TH/s at the end of July.
Bitcoin price remained below 60K for most of August. Source: CoinMarketCap
Factors that contributed to the decline in revenue
Several factors contributed to this drop in revenue suffered by Bitcoin miners. These are the main ones:
- Reduction in transaction volumes: A decrease in Bitcoin network activity can lead to lower transaction fees, which directly impacts miners’ revenue. In August, on-chain transaction fees contributed $20.76 million to total revenue, underscoring the importance of network activity in sustaining miners’ profitability.
- Market volatility: Bitcoin price fluctuations significantly impact miners’ revenue. A lower Bitcoin price can reduce the fiat value of rewards, even if the number of coins mined remains constant. August featured price-related challenges that contributed to the overall revenue drop.
- Increase in mining difficulty: As more miners compete to process Bitcoin blocks, the network difficulty adjusts upward. This makes it more difficult and resource-intensive to mine new blocks. This increase in difficulty without a corresponding increase in the price of Bitcoin can squeeze miners’ profit margins.
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