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In summary
- The largest Bitcoin mining companies are increasingly claiming greater dominance over the security of the Bitcoin network, even though their stock performance this year does not suggest such success.
- JP Morgan analysts noted that publicly traded US mining companies saw their share of the network hash rate pie expand for the fifth consecutive month, reaching a record 26.7%.
- In August, all 14 publicly traded Cryptocurrency miners collectively increased their capacities by 12 exahashes per second (EH/s), led by IREN and Marathon Digital.
The largest Bitcoin mining companies are increasingly claiming greater dominance over the security of the Bitcoin network, even though their stock performance this year does not suggest such success.
JP Morgan analysts summed up the current state of the market in their “September ’24 Bitcoin Mining Midterm Report” released on Monday, noting that publicly traded U.S. mining companies saw their share of the network hash rate pie expand for the fifth consecutive month, reaching a record 26.7%.
Hash rate measures the speed at which miners are working to mine the next Bitcoin block and earn their associated rewards of subsidies and fees. When the hash rate increases, it usually means that miners are using more electricity and more powerful machinery to mine Bitcoin. As a result, mining is more competitive and the entire Bitcoin network is more secure.
In August, the 14 publicly traded cryptocurrency miners tracked by JP Morgan collectively increased their capacities by 12 exahashes per second (EH/s). This growth was led by Canadian miner IREN, which added 5.5 EH/s, and Marathon Digital, the world’s largest corporate miner, with an additional 3.7 EH/s.
In total, miners have collectively increased their hash rate by over 50% since the start of the year. Their total combined hash rate is now 175 EH/s, which represents 26.7% of the entire Bitcoin network.
However, the increased hash rate has not necessarily translated into more revenue in recent months. IREN was the only public miner in August to increase its amount of BTC mined compared to the previous month.
According to JP Morgan, the monthly amount of bitcoins mined per exahash of operational capacity has dropped dramatically this year, largely due to the Bitcoin halving event in April. This event, which occurs every four years, halves the rewards per block mined, from 6.25 BTC to 3.125 BTC at the most recent halving.
“This metric has declined over time as the network hash rate (and mining difficulty) has increased, and tends to decline during the summer months as miners scale back their operations,” the analysts added.
Since September began, Bitcoin’s hash rate has hit new all-time highs while the price of Bitcoin has only continued to decline – a lethal combination for crushing miner profitability. Most public miners have also seen their share values plummet, with CleanSpark (CLSK) suffering a 12% drop.
The Valkyrie Bitcoin Miners ETF (WGMI), a diversified fund representing the mining industry, is down 2% year-to-date, while the price of Bitcoin is up 30%.
“The aggregate market cap of the 14 US-listed bitcoin miners we track has declined 3% since the end of August, and they are currently trading just below 2x their proportional share of the four-year block reward, the lowest level since May ’24,” JP Morgan wrote.
Edited by Andrew Hayward
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