Amid a surging Bitcoin network hash rate, miners face increasing challenges with falling profitability.
Bitcoin’s Skyrocketing Hash Rate
Over the past week, the Bitcoin network’s hash rate soared to a record 414 exahashes per second (EH/s) on Aug. 18. This represents an astonishing 54% increase since the start of 2023 and an 80% surge over the last 12 months, data from Blockchain.com reveals.
Plummeting Mining Profits
Despite the network’s robust security indicators, Bitcoin miners are grappling with shrinking revenues. The situation today eerily mirrors the period when BTC fell to a market cycle low of around $16,500 in November 2022. As per HashPriceIndex, the current revenue stands at just $0.060 per terahash per second per day. This figure is approximately half of what miners earned in early May, during the Bitcoin Ordinals inscription frenzy that resulted in high demand for block space.
Market analyst Dylan LeClair provides insight into the paradox of falling revenues amidst a hash rate peak. According to him, while newer and more efficient rigs will continue to emerge, “it’s almost time for the price to outpace.” In simpler terms, Bitcoin’s price must rise to ensure mining remains profitable at these elevated hash rates.
Miners Turn to Stock Sales
To navigate this bear market, many Bitcoin miners are turning to alternate revenue sources. A recent report by Bloomberg on Aug. 24 highlighted how 12 major publicly traded mining companies managed to secure about $440 million through stock sales in the second quarter.
However, this strategy doesn’t sit well with everyone in the crypto community. Mark Jeftovic, the mind behind the Bitcoin Capitalist newsletter, voiced concerns about this approach. He pointed out, “Some mining companies are diluting shareholders at an excessive rate,” and further elaborated that “if they are diluting you faster than Bitcoin is going up, then you are going the wrong way on a treadmill.”