27 Apr

According to new data, mining Bitcoin (BTC) may not be as profitable as it once was. Bloomberg reports that the profitability of mining Bitcoin is getting dangerously close to a record low, not seen since the days after FTX collapsed, which presents serious difficulties for those tasked with maintaining network security. 

The data shows that the “hashprice,” a measure of how much money a miner makes each day for each petahash of processing power, has dropped dangerously close to its lowest point. 

This decline is noteworthy because it occurred immediately following the recent Bitcoin halving event on April 20, which usually boosts the value of the cryptocurrency but this time fails to offset the bearish pressures caused by uncertain global economic conditions.

Notably, Luxor Technologies' phrase "hashprice" captures the "hard" reality that miners now face after Halving. Every four years, the event halves the block reward for miners with the goal of keeping the issue of Bitcoin on a deflationary timetable.

Recognizing the Hashprice Dynamics of Bitcoin

The price of Bitcoin hash reached $139 on April 20, right after the halving, but this was a brief increase. Increased transaction fees associated with the Rune protocol activity on the Bitcoin blockchain were the main cause of the jump.

Hashprice values, however, fell to $57, dangerously near to the November 2022 low of $55, as these costs normalized and mining difficulty increased. This figure illustrates the sharp fall in profitability that miners have experienced, which has forced them to rely more on transaction fees and the possibility of future price growth for Bitcoin.

Declining profitability in the mining industry also portends difficult times, especially for smaller mining companies.

Bloomberg reports that larger mining companies, such as Riot Platforms Inc. and Marathon Digital Holdings Inc., have made proactive investments in sophisticated equipment and huge mining infrastructure in order to weather the current profitability crunch.

On the other hand, in a market that is growing more capital-intensive and competitive, smaller businesses may find it difficult to survive.


Marathon Digital's Intentional Growth

Marathon Digital has increased its 2024 hash rate growth target in reaction to the difficult climate, with the goal of adjusting to the new mining incentive baseline of 3.125 BTC post-halving.

With an anticipated 46% growth, the company's hash rate capability was 24.7 exahashes per second at the beginning of the year. With further equipment orders and strategic acquisitions, Marathon expects to reach a hash rate of 50 EH/s by year's end.

Given the company's strong financial position, Marathon's chairman and CEO, Fred Thiel, expressed confidence in the company's ability to accomplish these growth objectives without the need for additional funding. Thiel pointed out:

"We now believe that we can double the size of Marathon's mining operations in 2024 and reach 50 exahash by the end of the year, given the capacity we have available as a result of our recent acquisitions and the amount of hash rate we have access to through current machine orders and options."

The company is working to further establish itself as a leader in the industry by achieving an operational efficiency of 21 joules per terahash through breakthroughs in mining technology and efficiency.

April 2024, Cryptoniteuae

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