Bitcoin Mining Profitability Declines in September – What Lies Ahead in October?

A recent report from Jefferies highlights a decline in Bitcoin mining profitability during September, driven by a continued rise in the network’s hashrate.

Bitcoin Mining Faces Profitability Challenges

The report, released over the weekend by the investment bank, shows a 2.6% month-over-month drop in daily revenue per exahash—a key metric measuring how much BTC miners earn per quintillion hashes of computational power they contribute each day.

While Bitcoin’s price held steady, the network hashrate increased by 1.7%, signaling more computational power securing the network. This increase boosts security but tightens profit margins for miners as competition intensifies.

North American Bitcoin mining companies saw a boost in their share of total BTC production, rising from 19.9% in August to 22.2% in September. This growth is attributed to better operational efficiency, thanks to cooler temperatures. Leading the industry were Marathon Digital, with 705 BTC mined, and CleanSpark, which produced 403 BTC. Marathon also maintained the highest hashrate in the sector at 36.9 exahashes per second (EH/s) by the end of September, followed by Riot Platforms at 28.2 EH/s.

Despite Chinese mining pools dominating Bitcoin’s hashrate, U.S.-based pools are rapidly gaining ground. As of late September, China and the U.S. controlled a combined 95% of Bitcoin’s hashrate, raising concerns about decentralization within the network.

Challenges Ahead in October

Looking to October, Jefferies warns of more hurdles for Bitcoin miners. Although BTC prices rose by roughly 5%, the 11% surge in network hashrate more than negated those gains.

Following Bitcoin’s fourth halving in April 2024, which reduced mining rewards from 6.250 BTC to 3.125 BTC, analysts estimate a potential annual revenue loss exceeding $10 billion for the mining sector.

Looking ahead, the upcoming U.S. presidential election in November could have significant implications for the industry. The report suggests the possibility of “incrementally favorable policies” regardless of the election’s outcome. Notably, investment firm Bernstein speculates that a victory for Republican candidate Donald Trump could drive BTC prices to new highs, while Democratic candidate Kamala Harris’s stance remains less defined. As of now, Bitcoin is trading at $65,073, up 4.0% in the last 24 hours.

Conclusion

As the Bitcoin mining sector navigates shifting profitability and geopolitical factors, October presents both opportunities and challenges. The interplay between hashrate, BTC prices, and regulatory developments will be key in shaping the industry’s future trajectory.

Disclaimer: Please note that the contents of this article are not financial or investing advice. The information provided in this article is the author’s opinion only and should not be considered as offering trading or investing recommendations. We do not make any warranties about the completeness, reliability and accuracy of this information. The cryptocurrency market suffers from high volatility and occasional arbitrary movements. Any investor, trader, or regular crypto users should research multiple viewpoints and be familiar with all local regulations before committing to an investment.

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