Bitcoin Miners Compete for Profits Before Declining: CryptoQuant

With the fourth bitcoin halving in 15 days, miners will focus on maximizing their profits before their block rewards drop significantly.

Although some Bitcoin mining companies have increased their sales activity, they still face problems such as low transaction fees, increased mining competition and the need for high computing power to produce the same amount of BTC.

Miners struggle to maintain profitability

The reduction of Bitcoin block rewards from 6.25 BTC to 3.125 BTC has a significant impact on miners. Their income will decrease by 50%, and they need a higher BTC price to maintain their profitability.

According to CryptoQuant's latest weekly crypto report, the daily revenue of the mining industry will reach a record high in 2024 due to the increase in the price of BTC. While revenue currently hovers around $67 million, it reached $79 million in early March, representing a 3.5x increase from the figures recorded in May 2020, the previous half of the event.

Unfortunately, the increase in miner's daily income has been outpaced by the price of hash, which was 30% lower than it was half a year ago. Hash price, the average income a miner earns every time they try to find a valid block, is currently at $0.11 and will drop to $0.055 after mining. In May 2020, the benchmark hovered around $0.16 TH/s.

In addition to the lower hash rate, Bitcoin hashrate increased from 116 EH/s to 600 EH/s after the last halving, which means that miners need more computing power to produce the same amount of BTC per day.

Transaction fees are reduced

Additionally, Bitcoin transaction fees fell by 90% from a daily total of 412 BTC in mid-December 2023.

“In fact, transaction fees are at a low level as a percentage of total block rewards (new bitcoin supply + transaction fees). Transaction fees represent ~3% of the total block reward, down from 37% in mid-December 2023. Payments in May 2020 were about 3% ahead of the previous half. Block reward,” CryptoQuant analysts explained.

These challenges have affected the daily BTC production of big Bitcoin mining companies like Riot Platforms, Core Scientific, Bitfarms, and Marathon Digital. It remains to be seen what the coming months will hold.