Bitcoin mining companies are facing significant challenges as profitability reaches an all-time low, according to a report by JPMorgan Chase.
In September, miners experienced a 6% drop in daily block reward gross profit, marking three months of declining revenue, despite a slight rise in Bitcoin prices.
The primary cause of this downturn is the recent Bitcoin Halving, which occurred in April and reduced miners’ rewards by 50%, potentially leading to a $10 billion annual revenue loss for the industry.
Additionally, increased competition and rising energy costs are further straining miners. The entry of major operators into the US market has intensified competition, making it difficult for smaller miners to remain profitable.
The capital-intensive nature of Bitcoin mining, which requires substantial investment in hardware and energy, exacerbates these issues. This is reflected in the stock performance of major US-listed mining companies like Marathon Digital and Riot Platforms, whose shares have plummeted by over 30% and 50% this year, respectively.
Market sentiment has also been affected by geopolitical tensions, prompting some investors to shift towards safer assets like gold. Although there were brief price increases following the Federal Reserve’s rate cut in September, the overall outlook for Bitcoin miners remains bleak due to reduced profits from the halving and rising operational costs.
