📖 Your Q2 Earnings Guide: Discover the Stocks ProPicks AI Highlights to Jump Post-EarningsRead more

Bitcoin mining sees higher profitability ahead of halving, JPMorgan report finds

Published 04/01/2024, 07:36 AM
© Reuters.

In March 2024, the Bitcoin mining industry saw strong growth, fueled by cryptocurrency prices soaring to record levels, which in turn boosted mining profitability, according to a report by JPMorgan. 

The analysis comes at a crucial time as the industry anticipates the Bitcoin halving event scheduled for April 16, 2024, which is expected to impact miners' rewards and overall profitability.

Bitcoin's price surged to an average of nearly $67,600 in March, marking the highest level on record, and concluded the month with a seven-day rolling average price around $69,900. This price increase represents a 25% jump from the previous month, with annualized volatility jumping to 65% in March from 42% in February.

The network's average daily hashrate, a measure of the computational power used for mining and transaction processing, reached a new peak of 600 EH/s (exahash per second) in March. The figure reflects a 4% increase from February and an 80% year-over-year growth. This increase in hashrate indicates not only a growing competition among miners but also the industry's resilience and optimism, the report notes.

Despite the positive trends, the upcoming Bitcoin halving event, which will reduce the block reward from 6.25 to 3.125 bitcoins, casts uncertainty over future mining profitability. JPMorgan's report suggests that the halving could lead to a decline in profitability in April unless offset by a strong rally in Bitcoin's price or a dramatic decrease in the network hashrate.

The average daily block reward revenue per exahash for miners was estimated at $100,400 in March, the highest since August 2022, representing a 33% sequential increase. This spike in profitability was attributed to the Bitcoin price appreciation outpacing the growth in network hashrate.

The report also touched on the performance of U.S.-listed Bitcoin mining companies, noting that the aggregate market cap of 14 tracked miners increased by 3% month-over-month to $20 billion. This figure represents 42% of the four-year revenue opportunity, according to JPMorgan's calculations. 

Among the listed companies, Cipher Mining Inc (NASDAQ:CIFR) emerged as the best performer with a 74% increase, while Bitfarms Ltd (NASDAQ:BITF) fell by 22%, marking it as the month's least favorable stock.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.