Bitcoin Miners Compete for Profitability Ahead of Halving: CryptoQuant

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Bitcoin Miners Transaction Revenue Clocks 400% YoY Surge in 2023
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With the fourth Bitcoin halving approximately 15 days away, miners are focused on increasing their profitability before their block rewards are significantly reduced.

Although some Bitcoin mining companies have increased their selling activity, they still face challenges like lower transaction fees, increasing mining competition, and the need for higher computing power to produce the same amount of BTC.

Miners Struggle to Sustain Profitability

The reduction of Bitcoin block rewards from 6.25 BTC to 3.125 BTC will significantly affect miners. Their revenues will be slashed by 50%, and they will need higher BTC prices to sustain their profitability.

CryptoQuant’s latest weekly crypto report revealed that the mining industry’s daily revenue reached record levels in 2024 due to the rise in BTC prices. While the revenue currently hovers around $67 million, it hit $79 million in early March, representing a 3.5x uptick from the figures recorded in May 2020, just before the previous halving event.

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Unfortunately, the surge in miner daily revenue eluded the hashprice, which was 30% lower than it had been before the last halving. The hashprice, the average revenue a miner gets each time it tries to find a valid block, is currently at $0.11 and will fall to $0.055 after the halving. In May 2020, the metric hovered around $0.16 TH/s.

Besides the lower hashprice, Bitcoin hashrate has more than quintupled since the previous halving, rising from 116 EH/s to 600 EH/s at the time of writing. This means miners need more computing power to produce the same amount of BTC per day.

Transaction Fees Decline

In addition, Bitcoin transaction fees have plummeted 90% from a daily total of 412 BTC in mid-December 2023 to 29 BTC at press time.

“Indeed, transaction fees as a percentage of the total block reward (new Bitcoin issuance + transaction fees) are at low levels. Transaction fees represent ~3% of the total block reward, down from 37% in mid-December 2023. Fees were also around 3% prior to the previous halving in May 2020. Higher fees or Bitcoin prices are needed to compensate for the loss of block reward,” CryptoQuant analysts explained.

These challenges have already affected the daily BTC production of the largest Bitcoin mining firms like Riot Platforms, Core Scientific, Bitfarms, and Marathon Digital. It remains to be seen what the upcoming months have in store for them.

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