FILE PHOTO: JP Morgan Chase & Co. corporate headquarters in New York

JPMorgan Reports Continued Decline in Bitcoin Mining Profitability for September

SUMMARY

JPMorgan’s report highlighted a third consecutive monthly decline in daily mining revenue and gross profit for Bitcoin in September.
The network hashrate increased by 2% from August, while the daily block reward gross profit reached its lowest level on record.

Bitcoin mining profitability has experienced a decrease for the third consecutive month in September, according to a recent report from JPMorgan. The research highlights that, despite a slight increment in the average Bitcoin price and network hashrate, daily mining income and gross profit have continued to drop, creating challenges for miners. The average hashrate rose by 2% from August, reaching 643 exahashes per second (EH/s), demonstrating continuous activity in the mining segment. However, this increment in computational power has not deciphered into better profitability for miners.

JPMorgan’s analysis highlights miners earned an average of $42,100 per EH/s in daily block reward revenue in September, stamping a 6% decrease compared to the previous month. Besides, the daily block remunerates net profit fell by 6% month-over-month to $16,100 per EH/s, representing a gross margin of 38.4%. This decrease in profitability reached its lowest point on record, signaling a concerning trend for those included in Bitcoin mining. The report also noted that transaction expenses remained repressed, contributing less than 5% of the block reward, which further affected the overall revenue for miners.

Despite the challenges in productivity, the total market capitalization of the 14 U.S.-listed miners tracked by JPMorgan rose by 4% to $21 billion in September. Among these companies, Hut 8 (Hut) emerged as a standout performer with a 21% increment, while CleanSpark (CLSK) faced challenges, encountering a 13% decrease in value. This variety in performance among miners highlights the competitive nature of the industry and the varying strategies utilized by different firms in response to the prevailing market conditions.

In addition to the profitability concerns, Bitcoin’s annualized volatility moreover dropped significantly to 44% in September, down from 62% in August. This reduction in instability proposes a steady market environment, which may give some relief to miners as they explore the challenges brought by reduced profitability. nonetheless, the overall sentiment within the mining community remains cautious, as the progressive decrease in revenue may lead to further alterations in operational techniques and investment decisions.

As the Bitcoin network evolves, miners will be required to adapt to the shifting scene and discover ways to optimize their operations in light of declining profitability. The interaction between network hashrate, block rewards, and transaction fees will continue to play a vital role in forming the future of Bitcoin mining. The information from JPMorgan serves as a crucial indicator for miners and investors alike, underscoring the importance of remaining focused and responsive to market changes as they explore the complex dynamics of the cryptocurrency industry.