Bitcoin Mining Profitability Hits Record Lows Amid Rising Difficulty and Hashrate

Bitcoin Mining Market Cap Falls 15% as Network Hashrate and Difficulty Increase

Bitcoin mining profitability has reached record lows, according to a recent report by JPMorgan Chase & Co. On Tuesday, the bank revealed that the average daily block reward revenue for bitcoin miners in August was a mere $43,600 per EH/s. This figure represents the lowest profitability recorded, highlighting the severe downturn in the mining sector.

Significant Decline in Mining Market Capitalization

The total market capitalization of U.S.-listed bitcoin miners tracked by JPMorgan fell by 15% last month, amounting to $20 billion. This decline in market value coincided with a third consecutive monthly drop in the price of bitcoin and an increase in the network hashrate, which refers to the total computational power used for mining and processing transactions.

Rising Mining Difficulty and Network Hashrate

JPMorgan’s analysis also noted a 9% increase in mining difficulty from the previous month. The network hashrate, which indicates industry competition and mining difficulty, averaged 631 EH/s in August. This represents a 16 EH/s increase from the previous month and is approximately 20 EH/s below pre-halving levels.

Transaction Fees and Volatility Insights

In August, there was a brief surge in transaction fees, which reached up to 120% of the block reward. This spike was considered an incremental positive for miners, potentially providing some relief amidst the challenging market conditions. Additionally, the annualized volatility of bitcoin rose to 62% in August, up from 45% in July, reflecting increased market uncertainty.

Comparison to Previous Highs

The current average daily block reward revenue stands in stark contrast to the peak value of $342,000 recorded in November 2021. At that time, the bitcoin price was around $60,000 with a network hashrate of 161 EH/s, showcasing a dramatic shift in mining economics.

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