Competitive Pressure Builds for Bitcoin Miners as Hashprice Swings

Bitcoin’s hashrate experienced an uptick this week, briefly surpassing 600 exahash per second (EH/s) and currently stabilizing at 598 EH/s. The hashprice, which represents the expected value of 1 petahash per second (PH/s) of hashing power per day, is about $57 per petahash.

Mining Centralization Grows as Bitcoin Hashrate and Revenues Shift

As of June 12, 2024, bitcoin (BTC) miners have earned approximately $410.5 million, with $65.62 million attributed to onchain fees. This June presents significant challenges for BTC miners in terms of revenue, and unless bitcoin’s price increases, it may become one of the year’s lowest-earning months. Let’s not forget, that at the beginning of the year, BTC miners received 6.25 BTC per block, but now they receive 3.125 BTC in rewards, plus fees.

From March 12 to April 21, bitcoin miners earned at least $100 per petahash daily (hashprice). One petahash equals 1,000 terahash per second (TH/s) or 1 quadrillion hashes per second (H/s) of computing power. This means approximately five Bitmain Antminer S21 units, each generating 200 TH/s, are required to produce a single petahash. From May 1 through June 12, the hashprice ranged between $44 and $57, with a brief peak on June 8 reaching $94 per petahash.

The decreased revenues have pressured miners, eliminating weaker participants while strengthening the strong ones. Despite a slight drop in hashrate from its peak, mining pool centralization has significantly increased. Two mining pools, Foundry USA and Antpool, now control 54.3% of Bitcoin’s global hashrate, with Foundry alone accounting for a substantial 28.3% or 169.55 EH/s.

To illustrate, this is equivalent to 169,550 petahash or 169 quintillion H/s. At a rate of $57 per petahash, the estimated daily earnings would be around $9.66 million. Producing this output, however, would require a whopping 847,750 S21 miners. As the Bitcoin mining landscape evolves, the growing consolidation of power among major mining pools will likely continue to attract attention.

The fluctuating hashprice and this year’s halving of block rewards have intensified economic pressures on miners, fostering a more competitive environment. Moving forward, miners’ resilience and adaptability will be crucial in navigating the uncertainties of profitability. Essentially, only the most technologically advanced and cost-efficient miners will thrive, reflecting the evolutionary principle where only the fittest survive in a constantly changing environment.

How do you see the fluctuating hashprice and recent block reward halving affecting the future profitability of Bitcoin mining? Share your thoughts in the comments below.