The fourth halving of Bitcoin, which was expected to push its value to new levels, initially appeared to be successful as Bitcoin surged past $70,000 in March, setting a record high. However, recent developments tell a different tale.
As per the latest information from CoinMarketCap, Bitcoin is struggling to maintain its upward momentum, currently trading at $58,629, showing a decrease of 2.41% in the past 24 hours.
Challenges for Bitcoin Miners Post-Halving
After the recent halving of Bitcoin, miners are facing their own set of obstacles. PlanB, the creator of the BTC stock-to-flow (S2F) model, raised awareness about these issues and mentioned,
“Miners are encountering difficulties post-halving. We require a price increase of 2x the current value of Bitcoin to start a bullish trend.”
Adding to these challenges, the investment bank Jefferies pointed out in a CNBC report that cryptocurrency mining profitability experienced a substantial decline in August. According to Jefferies, the average daily earnings per exahash — in other words, the income generated per miner — dropped by 11.8% compared to the previous month.
This decline underscores the financial pressures that miners are facing amidst fluctuating market conditions and increasing operational expenses.
As per an analysis by CryptoCrypto using IntoTheBlock data, the rewards for Bitcoin miners have significantly decreased. During the 2020 halving, miners were given 7,010 BTC, valued at around $75.99 million. However, in the recent 2024 halving, this reward decreased drastically to only 471.88 BTC, equivalent to approximately $28.1 million. This sharp reduction emphasizes the financial challenges that miners are battling due to changing market dynamics.
Hashrate On the Rise
Despite the challenges, BitcoinMiningStockGuy added,
“And Hashrate is still increasing. Optimistic.”
This trend is further substantiated by CryptoCrypto’s analysis of IntoTheBlock data, which showcased a significant surge in Bitcoin’s hashrate. In 2020, the hashrate was 140.93 million terahashes per second (TH/s), which has now soared to 695.84 million TH/s in 2024. This notable increase highlights the heightened competition and the increased computational power required in the mining industry.
Potential Solutions
In response to the declining profitability, publicly traded mining companies in North America are heavily investing in upgrading their equipment to enhance operational efficiency. These enhancements enable newer machines to achieve double the hashing power of their predecessors while maintaining the same energy consumption levels.
Marathon CEO Fred Thiel explained to CNBC that this cycle of upgrades is crucial as it helps counterbalance the worsening economic conditions in the mining sector.
“There is no need to add additional sites or power, just upgrade the systems.”
However, not all miners are facing the challenges equally. For example, Core Scientific, which emerged from bankruptcy earlier this year, has successfully repurposed its extensive infrastructure to support artificial intelligence and high-performance computing (HPC).
Therefore, as the industry continues to progress, it will be essential to monitor how these innovative approaches pave the way for solutions and set new standards for overcoming profitability issues.