Bitcoin mining companies are reducing their operational scale as revenues have significantly decreased, following a recent industry adjustment known as the “halving,” according to a May 13 Coinshares report. The Bitcoin network’s seven-day rolling average hash rate, which measures the computing power used to mine Bitcoin, showed a sharp decline from an all-time high of approximately 650 exahashes per second (EH/s) on April 19 to 586 EH/s by May 11.
The halving event, which occurred on April 19, cut the reward for mining a block of Bitcoin from 6.25 BTC to 3.125 BTC, effectively slashing the miners’ revenue by nearly half. This reduction has forced miners to adopt cost-cutting measures such as optimizing energy expenditures, enhancing mining efficiency, and securing better terms for hardware procurement.
Despite these challenges, CoinShares’ analysis based on Q4 2023 figures suggests that publicly listed Bitcoin mining firms, like Marathon Digital Holdings Inc. (NASDAQ:MARA) and Riot Platforms Inc. (NASDAQ:RIOT), are still profitable, with the average production cost per Bitcoin estimated at $53,000, while Bitcoin traded at $63,000 on Monday. However, profitability has diminished compared to pre-halving levels.
Additionally, new Bitcoin applications such as Ordinals and Runes have increased on-chain activity and network transaction fees, offering another revenue stream for miners. According to Ki Young Ju, CEO of CryptoQuant, transaction fees now constitute 7% of miner revenue, a significant increase from 1% two years ago. This change reflects the evolving landscape and adaptation strategies within the Bitcoin mining industry.
Featured Image: Freepik
Please See Disclaimer
