Bitcoin Mining Profitability Bounced Back In June: Jefferies Report

According to a Monday research report from investment bank Jefferies, Bitcoin miners experienced a slight reprieve in June as Bitcoin’s price increased by 2% and the total Bitcoin hashrate decreased by 5%.

This followed a challenging May, during which Bitcoin mining profitability reached an all-time low due to Bitcoin price pressures and intense industry competition.

Bitcoin Mining Profitability Explained

“June marked a period of modest recovery from the halving’s immediate impacts, most evident in May,” wrote analyst Jonathan Petersen.

As of July 6, Bitcoin’s total hashrate stood at 573 exahashes per second (EH/s), with one exahash equaling one quintillion hashes, according to Blockchain.com.

Hashrate is a proxy for competition in mining, where a higher total hashrate means less profitability for individual mining businesses.

Other profitability factors include the amount of Bitcoin miners are earning, and the market price of BTC itself at the time.

The interplay of these factors significantly influences the profitability of Bitcoin mining operations.

On April 19, the Bitcoin network experienced its fourth halving event, reducing the minimum BTC reward per block from 6.25 BTC to 3.125 BTC.

Coupled with a price decline, this event drove Bitcoin’s “hashprice” – a key indicator of Bitcoin mining profitability – to an all-time low on May 1.

Bitcoin price now around average cost to mine Bitcoin at the halving across all miners. This is a signal we are at the bottom. pic.twitter.com/akFOVTL6Q8

— MartyParty (@martypartymusic) July 7, 2024

That said, since the hit to profitability forced many inefficient miners to go offline, more efficient players were able to capitalize on the opportunity, increasing their share of the Bitcoin mining market.

Public Miner Performance

Jefferies reported that U.S.-listed public miners increased their Bitcoin mining output in June, capturing 20.8% of the network share compared to 19.1% in May.

Marathon Digital (MARA), the largest miner, extracted 590 BTC in June, representing a 4% decrease from May.

Despite reducing Marathon’s price target from $24 to $22, the bank maintained its hold rating for the firm.

Conversely, CleanSpark (CLSK) extracted 445 BTC, marking a 7% increase from the previous month.

The report also highlighted a trend among Bitcoin mining companies to diversify their revenue streams by venturing into high-performance computing.

This move capitalizes on the increasing demand for artificial intelligence and cloud computing infrastructure.

“Declining Bitcoin mining profitability, exacerbated by recent halving events, has fueled this strategic shift,” explained Petersen.