Bitcoin Mining Profitability Plummets as Prices Dip

Azeez Mustapha

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Bitcoin mining, the backbone of the world’s largest cryptocurrency network, is facing a significant challenge. As of July 5, 2024, the profitability of mining operations has taken a sharp hit due to a recent drop in Bitcoin’s price.

According to F2Pool, one of the largest Bitcoin mining pools, only five mining rigs remain profitable at current prices.

This situation has arisen as Bitcoin’s value fell below $53,500, a substantial decrease from its all-time high of $73,808 in mid-March.

Bitcoin Mining Profitability Plummets as Prices Dip
BTC/USD Daily Chart from TradingView

The most efficient machines, such as the Antminer S21 Hydro and the Avalon A1466I, can still turn a profit. However, many popular models, including the Antminer S19k Pro, are now operating at a loss.

This downturn is causing stress for miners, who must continually sell their Bitcoin rewards to keep their operations running. With prices falling, miners are selling more Bitcoin to cover costs, which can further push prices down.

Recent Halving Contributing to Bitcoin Mining Profitability Troubles

The situation is made worse by the recent Bitcoin halving event in April. This event, which happens every four years, cuts the mining reward from 6.25 to 3.125 Bitcoin per block. As a result, miners are now earning less for their efforts.

The network’s total hashrate, which measures the computing power used for mining, has also fallen by about 12% since the halving. This drop suggests that some miners have turned off their machines due to reduced profitability.

Despite these challenges, there might be a silver lining. Historically, periods of miner “capitulation”—when less efficient miners are forced to shut down—have often signaled a bottom in Bitcoin’s price. Some analysts believe we might be entering such a period now.

However, recovery might not be immediate. The Capriole hash ribbon indicator suggests that the current correction could last until September.

For the broader crypto industry, this situation presents both challenges and opportunities. While some mining operations may struggle or shut down, others may see a chance to expand their market share. The reduced competition could benefit the most efficient miners in the long run.

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Azeez Mustapha

Azeez Mustapha is a trading professional, currency analyst, signals strategist, and funds manager with over ten years of experience within the financial field. As a blogger and finance author, he helps investors understand complex financial concepts, improve their investing skills, and learn how to manage their money.

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