Bitcoin Miners Face Profit Squeeze as Hash Price Hits Lowest Level Since October 2023

Following the euphoria of Bitcoin’s recent halving event, miners are now grappling with a stark reality: declining hash prices leading to reduced profitability.

The hash price, which represents the average revenue earned by a Bitcoin miner per hash performed, has plummeted to its lowest level since October 2023. Crypto analytics firm CryptoQuant reports a significant drop in the hash price, from nearly $0.12 in early April to $0.07 post-halving, after reaching a peak of $0.19 on halving day.

Bitcoin’s halving event, which halved miners’ block rewards from 6.25 BTC to 3.125 BTC, has intensified the pressure on profitability. Despite this reduction, operational costs within the mining sector have remained unchanged. CEO of CryptoQuant, Ki Young Ju, estimates that the cost of mining with Antminer S19 XPs has doubled from $40,000 to $80,000 post-halving.

However, despite these challenges, the total network hash rate has remained relatively stable since the halving, indicating that mining remains profitable at current Bitcoin prices. Bitcoin has maintained its position above the $64,000 threshold since April 19, according to data from Cointelegraph Markets Pro.

“While it’s too early to gauge the long-term impact of the halving on the network hash rate, miners appear to be maintaining operations at pre-halving levels,” observed CryptoQuant in a recent report. The total network hash rate has held steady at 617 EH/s post-halving.

On the day of the halving, transaction fees surged to record levels relative to total miner revenue, accounting for 75% of total miner revenue, approximately $80 million. However, since then, transaction fees have decreased to about 35% of total miner revenue.

While immediate indicators suggest stability, the long-term effects on hash rate and miner activity remain uncertain. Historically, post-halving periods have witnessed miners exiting the market due to soaring operational costs. Variables such as Bitcoin price fluctuations and shifts in electricity costs will continue to influence the dynamics of the mining industry.